If you’re paying down credit card debt or buying a big-ticket item, a card with a 0% APR introductory period is the way to go. It will give you a chance to focus on paying off your balance interest-free.
Some 0% interest credit cards also offer rewards for spending on gas or groceries, and others offer cash back and signup bonuses. However, not all 0% interest cards offer rewards — it’s actually somewhat rare.
That’s because your main goal with a 0% interest card should be paying down debt, not spending cash to earn rewards. Plus, the money you’ll save on interest with a 0% APR card will far surpass the dollars you would earn from rewards.
If you’re looking for a credit card with rewards, there are many options that don’t have zero interest. It may make more sense to get two separate cards — one for rewards and one with 0% APR — rather than looking for one that has both. Just make sure you have the credit score to qualify, because many low interest and rewards cards require good or excellent credit.
Zero interest cards only offer 0% APR during an introductory period, which typically lasts between six and 18 months. After that, the normal APR will kick in and you’ll have to start paying interest on your balance. Some cards will even apply the ongoing APR to the entire balance you had during the 0% interest period, a practice known as retroactive interest. With your 0% interest card, your goal should be to pay off as much debt as possible before this happens.
Not all 0% interest cards have the same terms. Here are some things to consider when choosing yours.
- Length of 0% interest introductory period. The longer, the better. You want to give yourself as much time as possible to pay off your debt.
- APR after the introductory period. After the introductory period, you’ll have to start paying interest on your remaining balance. If you’re suddenly hit with a high APR and you still haven’t paid off your debt, you’ll start paying extra money in interest.
- Balance transfer fee. Some cards charge a fee for transferring your balance from a high-interest card to a zero interest card. Look for a card that has a relatively low balance transfer fee; the average is 3% to 5%.
Once you apply and get approved for your 0% APR card, transfer your credit card balances from your high-interest cards to your 0% interest one. Now you’ll have some time to breathe and pay off your debt without accruing more interest.
A few 0% interest cards on the market also offer rewards. However, you should primarily use 0% interest cards to pay down debt or to fund large purchases. If you’re interested in a rewards card, consider these options.
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