0% Interest Credit Cards
While a 0% intro APR credit cards does not offer a permanent solution to getting rid of credit card debt, it can help you accomplish several financial goals. With 0% interest credit cards, you can consolidate existing debt or take your time paying off a big purchase over 12 months or more.
A card with a 0% intro APR offer on purchases, balance transfers or both allows you to avoid paying interest for a certain number of months after opening an account. By halting interest charges that come with carrying a credit card balance, a 0% intro APR offer can provide you with a sense of relief while you pay down your debt.
But you’re not alone. The good news is that revolving consumer credit, which includes credit card debt, fell for the second straight month in September 2019 by more than $1 billion, according to the Federal Reserve. That’s the first time that has happened since the summer of 2012, according to Federal Reserve’s historical data.
Credit card debt is much more common than you think, and even the best of us can struggle to pay down a growing balance. The average credit card debt per cardholder — and there are now 148 million of us in the United States — was $5,645 as of August 2019, according to a report by TransUnion.
A temporary solution to credit card debt could be finding the best 0% APR introductory offer for you. This will give you the ability to make payments during a period of time with 0% interest and pay down debt much faster, so it’s important to pick the best 0% interest credit card for you.
Compare 0% interest credit card offers
|Credit Card||0% Intro APR-Purchases||Annual Fee||Regular Purchase APR|
|Best for large purchases: Blue Cash Preferred® Card from American Express||12 months||$95 (See Rates & Fees)||12.99% - 23.99% Variable (See Rates & Fees)|
|Best for sign up bonus: Discover it® Cash Back||See Terms||See Terms||See Terms|
*If balance transfers are requested within 60 days of account opening
Discover it® Cash Back
Who should get it: The Discover it® Cash Back is for anyone with good credit craving an easy-to-earn sign up bonus with no minimum spending requirement and the ability to earn 5% cash back at different places each quarter like grocery stores, restaurants, gas stations, select rideshares and online shopping, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases.
Why you’ll love it:
The Discover it® Cash Back offers a high rewards rate that puts money back in your pocket and doesn’t have a spending requirement for its unique sign up bonus, which offers a dollar-for-dollar match at the end of your first year.
Things to consider:
- Limit on how much you can earn
- Rotating bonus categories require activation
- Discover isn’t as widely accepted as cards in the Visa or Mastercard network.
What does 0% introductory APR mean?
An APR or annual percentage rate is the percentage of interest you pay over a year when you borrow from a card issuer. A 0% introductory APR offer is a temporary special offer on purchases, balance transfer or both that typically 12-15 months after opening a new credit card account.
The biggest perk of a 0% intro APR offer is avoiding interest charges during the first few months of having a credit card. The 0% intro APR offer typically starts once you’re approved for the credit card and can remain active anywhere between six to 18 months, depending on the duration of the offer and whether you follow the terms of conditions. Once the 0% intro APR offer is over, the credit card’s variable APR rate will kick in.
What is a good APR for a credit card?
Good APRS for credit cards exist and can be easy to come by, but whether you get a “good” APR with your new credit card depends entirely on your own credit score and several other factors out of your control, such as Federal Reserve’s rates.
The national average APR across all credit card accounts reached 15.09% as of the first quarter of 2019 — the highest rate recorded since 1994, according to the Federal Reserve data.
However, you’ll never be charged interest (based on APR variable) if you pay your balance in full from month to month. But if you do carry a balance, the APR will determine how much interest you pay over time. The higher the balance and the longer it’s not paid in full, the more interest you’ll be charged by the card issuer.
Best ways to use a 0% interest credit card
There are several ways to take advantage of a 0% interest credit card, especially during the first several months while your 0% intro APR offer is active. By using a 0% interest credit card, you’ll avoid paying fees over an extended period of time. Here are a few ways to take advantage of your 0% interest credit card:
- Making a large purchase — Pay for furniture or that shiny new iPhone if the credit card offers a 0% intro APR for purchases.
- Consolidating debt and balance transfer — It’s common to use a 0% APR card to consolidate debt and transfer a balance from a high-interest card to a card with a 0% intro APR.
- During emergencies — This can be a short-term way to cover a costly bill that comes unexpectedly. Being able to avoid interest charges during that time could make all the difference.
- Earning rewards — Take advantage of the fact that you won’t have to pay interest for a certain amount of time, and there’s a lot of rewards potential with credit cards.
What determines the APR on a credit card?
What qualifies as a “good” APR varies and is typically based on several factors, including a benchmark figure called the prime rate, the Federal Reserve’s interest rates, as well as your own credit habits.
Once your account is approved, credit card issuers assign an APR to your account. That rate is influenced by the card issuer’s variable interest for that card. There’s typically a range and you’re assigned a rate within that range, which is influenced by your own payment habits and credit score.
Card issuers also use a term known as “prime rate” to determine what the APR for a customer will be. The prime rate is a lending rate that card issuers offer to customers who have the best credit. The better your credit score and the more consistent you are with paying our credit card balance off and on time, the lower your interest rate will be. It shouldn’t be surprising if the lowest advertised APR for a credit card you apply for isn’t what you get.
Should I close a credit card after the 0% intro APR period end?
There are several things you can do after the 0% period ends that will benefit you further down the road. To start, don’t transfer the remaining balance to a new card. Avoid transferring a balance again if you have debt left over after the period ends because you could be deemed “risky to borrow” by lenders.
Secondly, it’s important to keep the card account open, regardless of whether the debt is paid off. The best thing to do is to pay in full to keep the account active, which in turn helps you build your credit. Remember to never pay late, or you’ll be penalized by the bank either through a late fee or a penalty APR. Lastly, try to create a realistic budget that gets you where you want to go financially.