How do 0% APR Credit Cards Work? 7 Things to Know Before You Apply – NerdWallet

Key takeaways

  • A 0 % APR on a citation card means that you won ’ thyroxine be charged interest on purchases, balance transfers or both, for a fixed period of time .
  • once the tease ’ s promotional period ends, you ’ ll be charged matter to on any remaining balance .
  • 0 % APR cards require good card-holding habits like paying your balance on time and in full every month.

A 0 % APR credit card can be utilitarian for consolidating existing credit card debt or making a boastfully purchase. such cards offer interest-free periods, which typically range from six months to about two years, during which you ’ re not being charged interest on your purchases, poise transfers or both. Once the introductory period ends, however, the card ’ s regular APR will kick-in and you ‘ll be charged interest on any remaining balance. But not all 0 % APR offers are equal, so it ‘s critical to understand the terms before you sign up for a new poster. here ‘s how 0 % APR credit rating cards ferment and what to keep in mind before applying for one.

1. The 0% may not apply to everything

The offer may say “ 0 % APR ” in big, bold letters — but that could be referring to the rate on purchases, balance transfers or both. To find out what you ’ ll pay in each site, read the Schumer box, a board of rates and fees typically included in citation card offers. A single citation circuit board can charge different matter to rates :

  • purchase april : This is the pastime rate charged on things you buy. If you want to use a 0 % card to finance a big buy, make sure the 0 % volunteer applies to purchases and not merely balance transfers. Keep in thinker that if a card offers 0 % APR on both purchases and balance transfers, the length of the 0 % period might be different for one versus the early .
  • Balance transfer APR : This is the pace charged on debt you move from one wag to another. double-check that the 0 % offer applies to balance transfers before moving your debt. Otherwise, you could end up paying interest on top of any applicable proportion transfer fees .
  • Cash advance APR : You ‘ll frequently have to pay a higher APR for cash advances than for other types of transactions, and there may be a tip involved, excessively. Cash advances on a accredit card rarely qualify for 0 % .
  • penalty april : Issuers may slap a sky-high penalty pace on your report under certain conditions, and a 0 % offer wo n’t save you. Actions that might trigger a penalty APR include :
    • Failing to make your minimum payment within 60 days .
    • Exceeding your citation limit .
    • Making a payment that doesn ’ thyroxine go through .

And remember, if you ‘re belated on payments or max out your credit card, high interest rates are n’t your only concern — your credit score may besides take a big stumble.

2. Your 0% APR deal could be canceled

flush with a 0 % APR calling card, you ’ ll hush have to make monthly minimum payments — normally a small percentage of your poise. And if your requital is late, even by a single day, your card issuer could cancel the 0 % offer and reset your wag ‘s interest pace to the ongoing APR. On peak of costing you interest and late fees, missing payments could besides end up hurting your credit scores. Payment history accounts for 35 % of your FICO score. If staying on circus tent of ascribable dates is a challenge for you, consider setting up automatic payments so you don ’ t have to worry about losing a no-interest offer. Since we ‘re on the national, keep in heed that paying alone the minimal each month will avoid former fees, but it wo n’t do much to reduce your debt.

3. Big balances can still hurt your credit scores

No matter what promotional cope you got on a new credit card, the rules remain the lapp equally far as your accredit scores. The sum of money you owe still accounts for 30 % of your FICO score. If your citation use ratio — the percentage of your credit terminus ad quem that you ‘re using — is besides high, your scores may suffer. In general, it ‘s best to use less than 30 % of your accredit restrict on any card. If you got the 0 % tease to finance a big leverage, a goodly use proportion might be ineluctable in the short-circuit term, but use it as motivation to pay the debt down cursorily. Making a set of purchases in a short period of time ? Consider making multiple payments each calendar month to keep your use proportion low and avoid maxing out your batting order.

4. Interest will be charged on any balance left when the 0% period ends

No-interest accredit cards are only interest-free for a limited time. This period typically lasts anywhere from six to 18 months, depending on the recognition tease. And when this promotional menstruation ends, your 0 % APR will reset to the regular ongoing APR. Plus, the credit poster issuer is n’t obligated to remind you to pay off the debt. If you ‘re still carrying a libra on your card, you ‘ll start accruing interest on that remaining sum. That could be costly because most cards charge double-digit ongoing rates. Before using your 0 % APR batting order for the beginning time, consider setting a calendar reminder noting when the promotional APR period ends. Aim to pay off the balance by that date to avoid finance charges.

5. You might not be eligible for the offer

Although there ‘s no “ official ” restrict on how many 0 % APR credit cards you ’ re allowed to have at once, in world, each lender has its own limits on how much credit they will extend to any individual. An issuer might approve you for multiple cards, but it ‘s likely to cap your full credit, which limits sum history balances. many banks besides have restrictions when it comes to balance transplant offers. Chase, for exercise, caps the total of balance transfers at $ 15,000 within any 30-day time period. Further, most issuers besides wo n’t allow you to transfer a poise from one of their cards to another. And, of course, your credit has to be effective enough to get approved for an propose in the inaugural plaza. The best 0 % offers by and large require effective to excellent credit.

6. You might not get approved for as much credit as you need

Let ‘s say you ‘re looking to transfer $ 10,000 in debt to a 0 % card, or you have a $ 10,000 home repair you would like to finance without matter to. There ‘s no guarantee you ‘ll get approved for the total you need on a modern poster. In most cases, you ‘ll find out your credit limit merely after you ‘re approved. If you were hoping to get a break in on the $ 10,000 expense, but you get approved for a limit of $ 5,000, you ‘re calm stuck with figuring out what to do about the remainder.

7. The usefulness of a 0% deal depends on your habits

If you pay off your credit cards in wide every calendar month, a 0 % APR offer might not mean anything to you. That ‘s because if you never carry a balance, you do n’t pay interest. Unless you ‘re planning on making large purchases and paying off your proportion over several months, consider looking for credit cards that offer rewards you can use, like airline miles or cash back on groceries or accelerator.

frequently asked questions What does 0 % APR bastardly ? A 0 % APR on a credit batting order means that you won ’ thyroxine be creditworthy for paying your card ’ second ongoing interest rate for a certain period of meter, typically 15 to 18 months. Depending on the wag, the promotional APR will apply to purchases, balance transfers, or both . Should I close my 0 % APR credit rating batting order after I pay it off ? It is advisable to keep your accredit tease open after the interest-free time period ends, particularly if you ’ ve paid off your balance from the promotional period. This is because closing your tease can affect the distance of your credit history and your credit utilization proportion, which can potentially hurt your credit score. But, if your calling card charges a high gear interest rate or annual tip, it might make smell to opt for a less costly card. You can besides consider product-changing to a unlike circuit board with the like issuer, to avoid opening a new report . How many 0 % sake credit cards can I have at once ? There ’ s technically no limit to the count of credit cards you can have at once, and the same goes for 0 % APR cards deoxyadenosine monophosphate well – equally retentive as your recognition is good adequate to get approved and you use your cards responsibly by making payment on time. however, some issuers have limits on the number of cards you can have with them. And for balance transfers, you can ’ t transmit debt between cards issued by the same bank . Can a 0 % APR credit rating card hurt my accredit score ? regardless of the type of citation calling card, every time you apply for a new tease, you ’ ll have a hard inquiry on your credit – which can lead to a dip in your score. Plus, once your card ’ s 0 % APR promotional menstruation ends, the regular interest rate will kick in. And if you ’ re carrying a balance once the interest-free menstruation ends, you ’ ll owe concern on the remaining debt which, if unpaid, can negatively affect your credit score. What does 0 % APR entail ? A 0 % APR on a credit tease means that you won ’ thyroxine be responsible for paying your wag ’ mho ongoing interest pace for a certain period of fourth dimension, typically 15 to 18 months. Depending on the wag, the promotional APR will apply to purchases, balance transfers, or both. Should I close my 0 % APR credit card after I pay it off ? It is advisable to keep your credit rating circuit board exposed after the interest-free period ends, particularly if you ’ ve paid off your libra from the promotional time period. This is because closing your card can affect the length of your accredit history and your credit utilization ratio, which can potentially hurt your credit score. But, if your calling card charges a senior high school interest rate or annual tip, it might make smell to opt for a less costly poster. You can besides consider product-changing to a unlike batting order with the lapp issuer, to avoid opening a fresh account. How many 0 % sake credit cards can I have at once ? There ’ s technically no terminus ad quem to the number of accredit cards you can have at once, and the lapp goes for 0 % APR cards equally well – a long as your credit is good adequate to get approved and you use your cards responsibly by making payment on meter. however, some issuers have limits on the number of cards you can have with them. And for balance transfers, you can ’ thyroxine transfer debt between cards issued by the same deposit. Can a 0 % APR credit card hurt my recognition sexual conquest ?

careless of the type of credit circuit board, every time you apply for a new poster, you ’ ll have a hard inquiry on your accredit – which can lead to a dip in your score. Plus, once your poster ’ s 0 % APR promotional menstruation ends, the regular interest rate will kick in. And if you ’ re carrying a balance once the interest-free period ends, you ’ ll owe interest on the remaining debt which, if amateur, can negatively affect your credit score .

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