The content of this page is accurate as of the publication date; however, some offers from our partners may have expired. Browse our list of the best credit cards or use our CardMatch™ tool to find the cards that suit your needs.
While paying interest is one of the biggest downsides to using a credit card, it’s not inevitable.
One way to avoid accruing interest is to pay the balance in full in each billing cycle. Another option is to sign up for a card that offers 0 percent APR for a limited period of time.
Because zero interest deals are promotional and don’t last forever, it’s important to understand what “zero interest” really means and what you can expect if you get approved for this type of card.
What is 0% per annum?
Zero interest simply means that no interest is charged on the credit card balance, whether the balance is received from purchases or transferred from another credit card. This rate is temporary and is usually offered to new cardholders, although some issuers sometimes give their existing customers periods of 0 percent APR on cards they already have.
Most zero interest cards have a promotional period that typically lasts between 12 and 21 months. At the end of the promotional period, your interest rate will return to the regular variable APR. This APR will vary depending on the card and your creditworthiness, but there’s a good chance it will be high given that the average credit card APR is almost 19 percent.
Please note that a balance transfer fee may apply when using a zero interest card. Most cards charge 3 to 5 percent of the balance transfer amount, so read the fine print carefully.
How do 0% APR credit cards work?
When you receive a card with a 0 percent annual interest rate, you will not be charged any interest on your credit card balance if you repay it in full before the end of the promotional period.
However, after this promotional period ends, you will continue to pay interest on any balance until you redeem the card. To use a 0% APR credit card, you will need a balance repayment plan before the end of the promotional period. If you have a plan, a zero interest credit card can be a smart way to save money on your debt.
Pros and cons of 0% per annum
- You will pay zero interest on purchases for a set period of time. This can save you money if you are planning on making a large purchase or paying off a high-interest balance.
- You can lower your balance with high interest. If your credit is not the best and you have balances on other high interest cards, you can transfer them to a credit card with a zero interest rate.
- The regular APR rate may be high after the end of the introductory period.. If you do not pay off your card balance within the 0 percent per annum period, you will begin to incur interest payments. And with the Fed’s recent attempts to tamp down inflation with a series of gigantic interest rate hikes, annual interest rates on credit cards are as high as ever.
- You may still have to pay a balance transfer fee.. Most cards that offer balance transfers charge a fee for doing so. This can cut down on the money you save by using a 0% APR card.
- Your credit score may be negatively affected. Opening a new credit card can temporarily hurt your credit score due to the harsh asking of your credit report and the lower average age of the bills. However, these effects are temporary.
- You may be tempted to overspend. Because you won’t have to pay any interest during the 0 percent APR period, you may be tempted to spend more than you can afford to pay back at the end of the period.
Deferred interest compared to 0% per annum
The deferred interest rate offers commonly seen on retail store credit cards are very similar to zero interest introductory offers, but there is a key difference.
In the case of a deferred payment offer, if you do not pay the entire balance before the end of the promotional period, you will be charged interest from the date of purchase, including the original purchase amount.
Be careful if you are considering a 0% APR deal from a retailer with their own credit card. You can face an incredibly high interest rate if the promotion period ends and you have a balance left, even if it is small.
How to choose a credit card 0% per annum
Follow these steps when looking for a suitable 0% APR card:
- Find out how long period zero isA: In most cases, the introductory purchase offer will be between 12 and 18 months, but some cards may offer up to 21 months.
- Consider the consequences of late paymentsA: If you miss a credit card payment, your issuer will most likely start charging interest on your balance, resulting in an early end to your promotional period and a late fee. And if your payment is more than 30 days late, it will hurt your credit history.
- Compare RewardsA: There are several balance transfer credit cards that do not offer rewards. However, some popular bonus cards offer a 0% starting annual interest rate on purchases and balance transfers in addition to points or cash back.
- Check fees: Check card information for balance transfer fees and other charges such as annual fee or foreign transaction fees.
- Consider Other Benefits: Learn about the card’s other perks, including sign-up bonuses, credit statements, and travel and shopping protection.
The 0 percent credit card offers a promotional period during which you will not be charged any interest on your credit card balance. This can be a great way to save on interest if you have a plan to pay off the balance on time.
Remember that “0 percent per annum” does not mean that you will never be charged interest. But you can avoid this by paying off your balance before the regular annual income kicks in and paying your subsequent monthly balances in full before the due date.
The editorial content on this page is based solely on the objective judgment of our contributors and is not based on advertising. It was not provided or ordered by credit card issuers. However, we may receive compensation when you click on links to our partners’ products.