0% APR Credit Cards

Used wisely, you can pay for large purchases or pay down existing credit card debt over time with bite-sized, interest-free monthly payments. Used poorly, however, and you’ll find yourself making interest payments on a balance sooner than you expected.

The trick in taking advantage of these credit card offers successfully is to remember two things: They’re temporary and conditional. 

At heart, a 0-percent interest rate is only a promotion, offered to new cardholders during an introductory period of anywhere from six months to 21 months, in general. Afterward, the interest rate will kick in on any remaining balance.

Also, the interest-free promotion is conditional on good behavior – being consistent in making your monthly payments on time. If you’re late, the interest-free period can expire prematurely and you’ll be faced with unexpected interest payments. Be sure to understand exactly how much and by when you need to make payments to take full advantage of the 0-percent offer.

How to choose a 0-percent APR offer

• Check the length of the offer. Look beyond the promotion, and check how long the introductory rate (sometimes called the “intro rate” or “teaser rate”) will last. The longer the introductory period, the better.
• Know your “go-to rate.” That’s the rate after the introductory period. You want the longest possible introductory period and the lowest possible go-to rate.
• Ask about balance transfer fees if you plan to transfer an existing credit card balance to the new card. The fees generally run 3 to 5 percent of the balance transferred. It used to be common for balance transfer fees to be capped, but that has become a rarity in today’s market. Watch your mail: Card issuers often run special offers when they lower or waive the fees.
• Weigh the other benefits that come with the card, such as the potential to earn free airline miles, cash back or savings on merchandise.

Once you own the card, be sure to plan ahead before making any large purchase. (Remember, you want to pay off your balance before the introductory period ends). Use a debt payoff calculator to see how much you’ll need to pay each month on your balance to retire the debt before the introductory period ends – and be sure you can afford it. Since paying on time is so critical, also consider setting up automatic monthly payments on your balance to avoid being late. Interest-free borrowing is a great deal for both first-time and existing cardholders. Just proceed carefully.