Interest rates on credit cards can be a substantial amount, so if you come across an offer with a 0% APR, it only makes sense you would be interested. A credit card with a rate of 0% basically lets you borrow money for free, as long as there are no additional fees outside of interest.
Annual percentage rate, or APR, is the cost of borrowing over a 1 year period. For interest charged on credit cards, you will incur interest on a monthly basis, so it is important that you pay off your balance in full every month if your credit card does not have a 0% APR.
Several offers are available with a 0% APR, but it is important you understand the terms and conditions of any credit offer you are considering. Just because the credit card offer comes with an APR of 0%, that does not mean that there are no additional fees associated with the credit card. Fees ranging from balance transfer fees to annual fees assessed on your account, will affect if the if the new credit card will actually be of any benefit to yourself.
Another point to keep in mind, and possibly the most important, is the timeframe the credit card offers an APR of 0%. Most credit cards have a period the offer with a 0% APR will be valid for, most range from just a few months to over a year. It is important to understand what consequences the card will have after that period has ended.
Even if the term for the offer does not last forever, it can still be very beneficial during the time of the reduced interest rate. From saving on interest payments to avoiding interest on a large purchase, the amount of money you can potentially save during that time can make the card worth it.
If you are carrying a balance on another credit card with a high-interest rate, the amount of money you are paying in interest every month could be put toward paying down the principal if you can find an offer with a 0% APR.
Transferring the balance one card to the new card with a 0% APR can potentially save you money and help you pay off your debt faster, just be sure you are aware of any balance transfer fees, along with the timeframe that a 0% APR is offered, along with the rate you will be charged after that initial period. It is smart to be sure you can pay off the debt during that initial 0% APR period to avoid interest and prolonging the time it takes to pay off the debt.
If you are not looking to transfer a balance, but instead looking to make a large purchase, it could be wise to make the purchase on a card with a 0% APR. If you were planning on financing the purchase anyway and you can pay off the principal before the 0% APR offer is over, it may be smarter to make the purchase on your new card, instead of traditional financing.
Be aware, if you do not pay off the purchase during the 0% APR period, your interest rate may be more than it would have been if you had used traditional financing on the purchase. Do your research before making a large purchase on any credit card.
You are right to be interested in a credit card offering an APR of 0% for any amount of time, but you should be aware of how these offers work, along with the benefit or consequences you may experience with such an offer. The two most important points to consider include any fees you may be charged outside of interest, and also the length of time that 0% APR offer lasts.