What You Need to Know About 0% APR Credit Cards

June 28, 2012 by  Filed under: Credit 

The annual percentage rate (APR) on a credit card is the percent of interest that compounds on top of the money you owe for your purchases. Percentage rates can vary greatly and can even change based on your spending habits. Several credit cards offer 0% APR as an introductory rate. These introductory rates can last anywhere from a few months to up to two years.

Introductory Rate Periods

Cards that have a 0% introductory APR, have varying interest rates after the introductory period is over. These rates can vary from an average rate of about 16%, to an extreme rate of over 25%. It’s important to consider what your interest rate will be when the introductory period ends whenever you are considering a 0% APR credit card.

A high interest rate can cause serious problems for those not ready for the sudden change, particularly if you are someone who carries a balance from one month to the next. Many people get trapped with high interest on their card when the introductory rate ends, not realizing that their total credit card balance is often charged at the higher rate, not just their new purchases. If a balance is not paid in full, the retroactive total on the balance can be extremely high. Consider a person who made $10,000 worth of charges during their 0% introductory rate. If on the day that the introductory rate expires a 25% interest rate kicks in, that $10k balance will now have $2500 in interest tacked on. This additional interest and amount owed is often charged against the credit limit on the card.


There is the rare exception to the rule of the 0% introductory rate. There are a few business cards, like the Chase Ink Bold card, that carry a 0% rate permanently, rather than just as an introductory rate. These cards often have a large annual fee and require a very high, near perfect credit score to obtain. The 0% interest rate never expires as long as the card holder meets the terms to qualify for the card.

Spending Strategies

When an individual is approved for a credit card with a 0% APR, the card company is required to tell you how long that introductory rate will last. Credit cards with 0% APR are fairly common and can help build credit while helping you not pay interest on the purchases you make. A common strategy to gain some credit with a 0% APR card involves charging a large purchase that you had intended to make with cash. By making that purchase with credit and knowing how long your 0% introductory period is, you can make timely monthly payments, and pay the balance in full within the introductory period. This helps to build your credit without racking up any debt.

Balance Transfers

Credit cards with 0% APR can be used for more than just getting an interest-free repayment plan on purchases you make today. Several cards that carry a 0% introductory rate on the interest for purchases also have 0% interest on balance transfers. This can be used to transfer an existing balance from a card that has a high interest rate to the 0% APR credit card and save you some money while you focus on repaying your debt.

Debra Lee Dragon is a freelance writer providing content for CardGuys.com- a site that helps consumers find the best 0% APR credit cards and balance transfer offers. Find and apply for a credit card that best meets your needs, today!

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