How a 0% Intro APR Credit Card Can Help You Avoid Sky-High Interest Rates This Year

How would you like an interest-free loan to pay off debt or pay for a big purchase this year? If you know how to strategically use a 0% intro APR credit card, it’s not as difficult as you might think.

Credit cards that offer a 0% introductory APR allow you to carry a balance for a certain period of time, usually nine to 21 months, without interest being charged. Depending on the type of card, you can make new purchases, transfer balances from another account, or both.

Given that average credit card interest rate currently over 20% off, that’s thousands of dollars in savings. Make sure you have a plan to pay off your balance before the promotional period ends, or interest will start accruing on the remaining balance.

If you have a balance on your card, want to save money, or just need a break from paying interest, here’s how to take advantage of these promotional offers, as well as some other options worth considering.

What does 0% intro APR mean?

A 0% intro APR offer technically means that annual interest rate 0% for a certain login period after opening an account on your credit card. After this window closes, the regular variable APR will apply to any remaining balance you hold on your card.

The actual length of the 0% APR period and which transactions it applies to will depend on the card. Intro periods may apply to new purchases, balance transfers or both. If the card offers an introductory period for new purchases, you won’t be charged interest on those particular transactions. You will still have to do what is required minimum monthly payments and pay the balance before the promotion expires.

If the card offers a promotional period for balance transfers, you won’t incur interest on balances you transfer from other credit cards. You will still have to pay the balance transfer fee.

What are balance transfer fees?

A balance transfer offer (or card) can help reduce how much interest you pay on your credit card debt. To take advantage of the balance transfer 0% APR offer, you’ll typically have to pay a balance transfer fee (typically 3% to 5% of the total balance you’re transferring) or a flat fee — generally, whichever is greater. .

If your 0% introductory APR offer has a balance transfer fee, you’ll be charged each time you transfer a balance to the card. Keep this in mind when deciding whether transferring your credit card debt will actually save you money or just add to the balance you want to pay off.

How does the 0% APR intro offer work?

If you plan to use the card’s 0% introductory period, make sure you understand which purchases or transfers are eligible. So, you can start availing the offer as soon as it is approved. Also find out if the promotional offer applies to new purchases, balance transfers or both.

There may also be additional rules about how long you must make balance transfers. For example, some credit cards may offer a 0% introductory APR for the first year or longer, but any balance transfers must be made within the first few months.

Just because it’s a 0% APR card doesn’t mean it’s fee-free. There may still be fees for late payments, cash advances and foreign transactions. Many of these fees can be applied during the 0% introductory period, including balance transfer fees.

It is also important to understand the consequences if you do not make at least your minimum payments during the promotional period. Most 0% APR offers include high fees for late payments, and some credit card issuers may cancel the 0% APR promotional offer or impose a higher penalty APR. if you miss payments. Depending on the issuer’s terms, you may start earning interest on your balance right away. Read the fine print on any contract before signing.

Is a 0% APR offer the same as deferred interest?

Retailers advertising “no interest if paid by X date” a deferred interest offerthis is different from the 0% APR offer. With a deferred interest offer, you won’t owe any interest if you pay off your entire balance by the end of the promotional period. If you fail to pay the entire balance before the end of the promotional period, the deferred interest will be added to your balance.

On the other hand, with a 0% APR offer, you’ll start accruing interest as long as you make the required minimum payments. only remaining balance after your login expires.

Here’s one way to look at it: If you have an ounce of doubt that you’ll be able to pay off your balance before the promotional period ends, go with the 0% introductory APR offer instead of the deferred interest offer.

What happens when the 0% APR expires?

Credit cards with A The 0% APR introductory offer lasts for a limited time only — usually between nine and 21 months. After that, the variable APR will apply and any outstanding balance will receive the higher interest rate.

If you are unable to pay off the remaining balance by the end of the promotional period, you have several options. One is to do another balance transfer and transfer your remaining balance to a new card so you have extra time to pay off your debt. Another option is to apply for a fixed interest personal loan.

7 things to know about 0% APR credit cards

1. Introductory offer may apply to new purchases or balance transfers

Before you apply for a card with a 0% APR introductory period, find out if it applies to new purchases, balance transfers, or both. Review which eligible purchases or transfers are eligible so you can start taking advantage of the offer as soon as it’s approved.

2. Entry 0% interest periods vary

Credit cards with a 0% APR introductory offer last for a set period of time — usually between nine and 21 months. A variable interest rate is then applied. Any unpaid balance will then begin to accrue interest.

See how long the 0% APR introductory offer lasts before you apply. If you’re planning to make a big purchase or transfer debt to take advantage of the 0% interest, make sure the balance is paid off before the introductory offer ends. If possible, choose the card with the longest access period.

3. A balance transfer card can help you repay your debt and reduce interest

If you’re trying to lower the interest you pay on your credit card balance, a balance transfer card allows you to transfer your debt to a new card with an introductory offer of a lower interest rate. Make a plan to pay off the balance in full before the offer ends to avoid facing a higher variable interest rate.

4. Some 0% introductory offers come with a fee

If you transfer a balance, you may have to pay a balance transfer fee of 3% to 5% of the amount. Depending on how much debt you have to transfer, you may have to multiple transfers over time and pay multiple balance transfer fees.

While a 0% introductory APR offer sounds good, always read the fine print. You may have fees for late payments, cash advances, and foreign transactions that may still apply during the sign-in period.

5. You are still responsible for monthly payments

You won’t be charged interest during the term of your card, but you’ll need to make monthly payments to keep your account current. Missing or late payments can mean heavy fees and, depending on your issuer’s terms, could void your 0% APR offer entirely. You can even start accruing interest on your balance right away at a higher penalty rate.

6. You usually need good or excellent credit to get approved

Many credit card offers, such as interest-free periods and rewards, require a good to excellent credit score, typically between 670 and 850.

When reviewing offers, see what the minimum credit score requirement is. If it doesn’t look like you’ll qualify for any balance transfer offers, think about it setting up your credit score. You can start with a credit building card, such as a secured credit card, to create good credit habits like paying your bill in full and on time every month. As your account grows, you’ll be eligible for a 0% APR card and other cards with rewards and benefits.

7. Don’t cancel your credit card after you’re done with the 0% intro APR period

Canceling a credit card can hurt your credit scoreso it’s best to keep the account open and keep making payments on time. When comparing 0% intro APR credit card offers, also look for any rewards and cash back offers. If you plan to continue using the card, you can earn rewards on future purchases.

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