Best Zero Percent Interest Credit Cards | 0% APR Credit Cards Reviews

Whether you’re shopping around for a new credit card or just opening the pre-screened letters that appear in your mailbox, you’ve likely come across 0% APR credit card offers. These no-interest promotions sound enticing, but what’s the catch? And should you be looking for one of these offers the next time you apply for a card?

Here’s everything that you need to know about 0% APR credit cards, why they’re often a great idea, and what to watch out for when you get one.

What a 0% APR Card Does

Many credit cards today offer some form of no-interest promotion to new cardholders. These enticing offers – usually ranging somewhere between six and 24 months long – give customers the ability to use their new credit card for a certain period of time without being charged any interest on the balance.

Typically, if you don’t pay your statement balance in full each month, you’ll see additional fees added to the balance in the form of interest. These fees are pretty significant, too, with the average APR currently sitting around 16% (but frequently reaching as high as 30% or more). Your interest fees are then added to your account balance, from which new interest fees will be calculated the following month. Yes, this means that moving forward, you’ll be paying interest on your interest.

With a 0% APR credit card offer, though, you can pay off a charge over a few months’ time without incurring any finance charges. As long as you pay off the balance before your promotional period ends, you won’t be charged anything additional in the form of interest fees.

How Much a 0% Card Can Save You

It is a well-known fact that opening up a 0% APR credit card can save you money, but how? And how much can it really save you? Well, the answer really depends on you and your spending habits.

There are two types of promotional no-interest offers that credit card companies will offer to new cardholders. One is a 0% balance transfer offer -- which allows you to move an existing balance, where you’re paying a high interest rate, to your new card, where you’ll enjoy an interest-free payback -- and a 0% APR purchase offer. Today, we are only talking about the latter.

A 0% APR interest card can give you the ability to spend on your new account without the risk of high interest fees. If you want, or need, to pay off the balance over time, you can do so… and you won’t have to worry about paying anything beyond the original charge, as long as you pay off the total balance before the promotional period expires.

This can come in real handy if you’re looking to make a big purchase. For instance, if you need to buy new furniture for the house, the hot water heater explodes, or your college student requires $1,500 in books next semester, you can utilize a 0% APR offer. Whether you need to stretch that repayment out over two months or 12, you’re safe. This can help provide a buffer between your budget and those big, sudden expenses.

Let’s see a real-life example of exactly how much this could save you, though. Say you need to purchase a new transmission for your vehicle, to the tune of $6,000. While you may have an emergency fund set aside for expenses just like this, many Americans do not. This is where a 0% APR card could really come in handy.

You have a few choices here: pay off the bill in full (which many people simply cannot afford), charge it to a credit card, or take out a personal loan. By opting for the latter, you’ll likely incur interest rates ranging anywhere from 5% to as high as 30% or more. Even if you get a loan with a middle-of-the-road interest rate, a 12-month repayment at 14% will cost you $6,468 in the end. That’s almost $500 extra out of your pocket!

If you were to instead choose a credit card without a 0% APR offer, you could be in even worse shape. Thanks to compounding interest, a card with an average interest rate of 18% would wind up costing you $6,601 after a 12-month repayment. That’s more than $600 in interest alone, just for taking a year to pay off the debt.

By contrast, an interest-free credit card offer (of 12 months or longer) won’t cost you a penny more. You could pay the mechanic’s shop for your pricey new transmission and then spread that repayment out over the next year. When the 12th payment is made, you will have a $0 balance left on the card -- and will have paid exactly $6,000 for your vehicle’s repair.

If you’re the type of person who enjoys saving $500-600 a year on a purchase like this, it’s easy to see why a 0% APR credit card is a great idea.

How to Use a 0% APR Credit Card

Using an interest-free card is easy: you simply spend the same way you would with any other credit card. The only difference comes in the repayment.

If you pay off your entire statement balance each month, you won’t notice anything difference between an interest-free card and a typical, interest-bearing one. After all, if you pay off your statement balance in full, you don’t pay interest on the charges anyway! It’s like a no-interest loan each and every month.

However, if you plan to carry over a balance from one month to the next, you’ll be pleasantly surprised when using a 0% APR card.

All interest-free credit cards have a promotional period during which no interest is charged; unfortunately, this time period doesn’t last forever. As long as your balance is paid off within that promotional window, the issuer won’t charge your account any interest. No matter what you buy or how you choose to pay it off.

How Much Does a 0% APR Card Cost?

The great thing about a 0% APR credit card is that it doesn’t actually cost you anything to use this feature. There are a few other expenses to keep an eye out for, but the interest-free feature is, in and of itself, gratis.

Let’s take a look at some of the ways that a 0% APR card can cost you, even if the no-interest feature doesn’t.

Annual Fee

Some of the best credit cards out there offer a slew of benefits. These might include a great cash back rewards rate, an enviable sign-up bonus, and, of course, an excellent 0% APR promotional period. Those make these cards desirable, but it also means that applying for one will probably cost you.

If you’re looking for a credit card with any of these features -- and particularly a lengthy 0% APR promotional offer -- you are likely to encounter an annual fee. Even though the idea of an annual fee might turn you away initially, though, they can often be well-worth the expense.

For starters, let’s take the transmission example above. By using a no-interest credit card to make the purchase, you could easily save yourself a lot of budget stress (by paying off the balance over a year’s time) as well as a lot of money ($500-600 or more, depending on your actual interest rate). While it might not sound appealing to pay a $99 annual fee on a credit card, you’re still saving hundreds of dollars over the course of your purchase.

Annual fees can vary, and some cards will even waive them for new customers on the first year. Be sure to shop around and do the math to see how much you’ll save when all is said and done. Once your promotional period expires, you can always cancel the card or downgrade to a fee-free version to avoid another annual fee. This is especially helpful if the promotional APR offer was the only benefit you needed or would use.

Expiring Promotions

The easiest way that you can wind up paying interest on a purchase that you made with a no-interest credit card is to lose track of the promotional interest period. If you go over the time allotted and still continue to carry a balance, you’ll be charged interest on the remaining amount. And depending on how much debt you still carry, this could be significant.

Cards with 0% APR offers vary greatly. Some cards will only offer you three-month promotional periods, giving you a very small window in which to make and pay off your purchases. Others can offer promotional interest period ranging anywhere from six-, 12-, 18- and even 24-months long. It’s incredibly important to pay attention to which one you apply for and use.

Once that promotional period is up, any remaining purchase balances left on the card will be charged interest at the usual rate. Depending on the card and your creditworthiness, this APR could range from as low as 12% to as high as 35%, on average. This can quickly, and easily, turn a “smart” buy into a very expensive one.

If you’re going to buy with a 0% APR card and pay off the balance over time, make sure that you do your math correctly and pay off the total amount in time. Failing to do so can cost you a pretty penny once the promotion expires.

Other Fees

Just because a card doesn’t charge you interest for a certain period of time doesn’t mean that you’re not still subject to all of the other fees that credit cards are known for charging. You can easily still cost yourself quite a bit of money if you don’t manage your account wisely.

For instance, things like late fees, over-limit fees, and returned payment fees are still fair game. Want to take out a cash advance or conduct a balance transfer? Unless that card also offers promotions on those features, you’re looking at both transaction fees and interest charges on the funds involved.

Just because you can make purchases without paying interest doesn’t mean that there aren’t plenty of other fees that can wreck your budget. It’s still just as important to be on the lookout for other ways that you could incur additional charges.

Things to Watch Out For

If you’re looking for a 0% APR credit card, you’re in luck: there are plenty of amazing ones out there and they can all help you meet your financial goals without an added expense. Of course, there are still a few things you’ll need to keep an eye out for, though.

Interest-Free Term

The most important thing to check, confirm, and track when signing up for and using a no-interest credit card is the actual interest-free term offered. You will want to see how long that promotional term is, exactly when it ends (based on the day you’re approved for the card), and when you’ll begin being charged interest for a balance left on the account when the term ends.

If you don’t pay attention to the end of your promotional interest period, you can easily accrue serious fees, even if you’re only a month off in your payoff calculations.

Late Payments = Ended Promotion

With some credit card issuers, you can wind up losing your promotional interest period early if you aren’t responsible with your account. If you’re 30 (or sometimes 60) days late on your payment, the policy could be that your promotional offers are revoked… even if you were supposed to have a number of months remaining to pay off your balance without interest fees.

While you should always do everything in your power to avoid a late credit card payment, it’s especially important if you are taking advantage of a 0% APR offer.

0% APR Versus 0% Deferred Interest

If you’re new to, or only somewhat-acquainted with, the world of interest-free credit cards, you could easily fall into the trap of deferred interest. At first glance, these types of offers can look identical to 0% APR card offers, bringing with them the same features, promises, and (of course) price tag. However, deferred interest credit cards are significantly different.

With a 0% APR credit card, you will enjoy interest-free spending for a specified number of months. Once that time period is up, you will go on using the card as normal. If you still have a balance from the promotional period, it will now carry over to the “typical” interest rate and begin incurring fees from that point on. New purchases will also be subject to the same interest rate.

Deferred interest cards are very different, though.

With a deferred interest card, you will make a purchase with the promise of no interest for a specified period of time… the same as the 0% APR card. However, it’s not that this interest isn’t charged at all; the catch is that it’s deferred.

What does this mean? Well, if you reach the end of that promotional period and still have a balance remaining -- even if it’s $5 -- you will now be charged the entirety of the interest that was deferred. Let’s say that your 0% APR offer saved you $600 over the last 12 months of payments. If you have a balance remaining in month 13, though, you’ll not only be charged interest on that balance moving forward, but you’ll now be retroactively charged for the $600 in interest that you thought you saved!

Deferred interest credit cards are common in the retail sector; when you see companies offering you no-interest on your purchases with them, it’s often involving a deferred interest card. However, it’s important to always check whether the card you get is truly 0% interest, or if it’s simply 0% deferred interest. Then, plan your repayment accordingly.

Overspending

Interest charges are good motivators. After all, that big sale item isn’t as much of a deal if you have to pay it off over time and incur 19% APR interest on the balance.

That’s why a 0% APR card can lead to overspending. It can be tempting to buy an item that you might not be able to afford -- or otherwise wouldn’t opt for -- because you won’t have to pay any interest on the repayment. Since you can pay it off over time without added fees, you can sometimes talk yourself into spending a little more.

At the end of the day, your budget should rein supreme. If you truly can’t afford something, a 0% APR offer shouldn’t change that.

Forming Poor Repayment Habits

Another pitfall that many credit card users encounter is the habits that a 0% APR card can form. If you’re not careful, these new tendencies can be the root of years of debt trouble.

You’ll see it preached everywhere: always pay your credit card bill in full, every single month. Failing to do so can lead to overwhelming debt, high interest fees, and more. But if you remove the interest charges from the equation, it’s suddenly a bit more acceptable to let a credit card balance hang around for a few months.

This can be a recipe for disaster.

Paying off a balance over time can be fine, if it’s done once or twice and with intention. However, you’ll want to make sure that you aren’t just forming poor financial habits. By getting used to only paying off a portion of your balance and carrying debt around, you could easily begin to dig a financial hole that could take years to overcome.

Should I Get a 0% APR Credit Card?

If you’re reading this article, you’re probably wondering if a no-interest credit card is right for you. For many people, the answer is a resounding yes… after all, they’re excellent offers that can give you a financial leg up when you may need it most.

By utilizing a 0% APR offer wisely, you can make large purchases without impacting your budget all at once. These offers can also help you cover emergency expenses without needing to take out a cash advance, apply for a personal loan, or even pull from retirement savings. As long as you’re smart about the repayment, you won’t pay a penny extra for the convenience.

When used improperly, though, 0% APR cards can lead to trouble. If you already have poor credit card habits, fall prey to overspending, or simply don’t pay attention to the promotion you are given, you could wind up paying a lot more than expected. As with all credit card products, using a 0% interest card still requires discipline.

Whether you need to remodel a bathroom, repair the car, or pay for your next family vacation, the right 0% interest credit card can help you get there. And if used properly, it can get you there fee-free.

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