What is a 0% Intro Credit Card?
0% introductory APR (annual percentage rate) credit cards give cardholders the opportunity to make purchases and balance transfers for a certain length of time without having to worry about accruing any interest if they make the minimum payment each billing cycle. Having a card with a 0% APR for a few months to over a year can greatly benefit anyone hoping to make a big purchase or pay down existing debts, but the card’s terms and conditions must be followed, or the issuers will begin to charge interest according to the regular APR. Many credit cards will offer a 0% introductory APR period for purchases and balance transfers, but it’s rare to find one that doesn’t charge interest on cash advances.
Are 0% Introductory APR Credit Cards Worth It?
Credit cards offering 0% interest on purchases and balance transfers can greatly benefit consumers if they’re used properly. Not having to worry about any interest for six to 18 months can help cardholders hoping to make a big-ticket purchase they can easily pay it off over time. Plus, if an emergency were to happen such as a needed auto repair or a medical emergency an interest-free credit card can ease the burden of a big bill into multiple payments.
Cardholders who have multiple credit cards with stacking up balances and spiraling interest rates can use a balance transfer card to consolidate all their debts onto a single card, which they can pay off without having to worry about interest for an extended period. They’ll have to pay a fee for each time they transfer a balance, but there’s a good chance these balance transfer fees will be less than the interest cardholders would have accrued had they tried paying off each card individually.
The benefits of 0% Introductory APR credit cards aren’t just limited to the lack of interest rate. It’s not uncommon to find a credit card offer that gives cardholders extra perks such as rewards points, cash back, or travel insurance.
What Should I Look For in a 0% Introductory APR Credit Card?
The first thing cardholders should do when looking around for a 0% introductory APR credit card is read the terms and conditions of each card and think strategically about what they’re going to use the card for. Every credit card is different, and cardholders must know what the 0% APR is going to apply to, whether be purchases, balance transfers, or both. They also should know how long the 0% APR period lasts so they can pay off their card as quickly as possible without accruing any interest.
Since many 0% introductory APR credit cards offer additional perks, cardholders should also investigate whether they’d prefer travel rewards points or cash back. They should also be mindful if their prospective credit card has an annual fee, or if they must pay foreign transaction fees when making purchases abroad.
What Are the Downsides of a 0% Introductory APR Credit Card?
The biggest drawback of a 0% introductory APR credit card is the potential for carrying a balance past the 0% APR period and accruing interest. If a cardholder makes a big-ticket purchase and still has a balance past their 0% introductory APR period, whatever item they purchased will become more expensive as time passes. The same goes for balance transfers, as once the promotional 0% introductory APR period expires the cardholder will have to pay interest on their balance, thus slowly eroding the savings they could’ve had if they would’ve paid off the card during the 0% APR period.
The potential for unchecked spending is another downside to credit cards offering 0% APR for a certain period because the cardholder could spend more and more on the card while the time frame to pay off the balance interest-free dwindles month by month.