A 0% interest card is a fabulous tool to use when paying down credit card debt or financing a major purchase. During a limited introductory period, these cards allow you to carry a balance without paying interest. A common strategy is to consolidate the balances from your higher interest rate cards onto one 0% interest card, and then pay down the total debt interest free.
Better credit = better 0 APR cards
Zero-interest cards aren’t hard to get as long as you have decent credit. However, the higher your credit score, the better and more plentiful your 0% interest credit card options will be. There are several factors to consider when comparing 0% interest cards:
- Introductory period: The length of time the balance on your card won’t accrue interest. It’s typically between six and 18 months. Make sure to pay off your balance before this period ends, or you’ll quickly accrue more debt as interest compounds.
- Balance transfer fee: The cost of transferring debt from one card to another. Fees tend to be around 2% to 5%.
- Annual fee: Like some other credit cards, certain 0% interest cards charge a yearly fee, which is usually $20 to $500.
- Annual percentage rate: The annual interest rate that kicks in after the introductory period ends. Issuers determine this APR by looking at your credit history, and a better score leads to a lower rate.
There are a few 0% interest cards you can qualify for with average credit (FICO 630-689), but those tend to come with annual fees, short introductory periods, steep APRs and balance transfer fees.
If you have good (FICO score 690-719) or excellent credit (FICO score 720-850), you’ll be more likely to qualify for a 0% interest card with no fees and a low APR.
Alternatives to 0% interest credit cards
If your credit isn’t strong enough to get approved for a 0% interest card, work on boosting it until you’re ready to apply again. However, applying for multiple cards in a short period of time can hurt your credit score, so wait at least six months before reapplying, or longer if your credit is bad.
If you’re eager to get a 0% interest card now, you can ask to become an authorized user on a friend’s or family member’s card. This allows you to use a card in that person’s name to buy things and pay it off with no interest.
The bottom line: It takes good or excellent credit to qualify for most 0% interest credit cards. Once you’re approved, this type of card is helpful in paying off old credit card debt interest free. However, pay it off before the introductory period ends or more debt will build up fast, which will hurt your credit.
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