What does 0% APR mean?

A credit card with a promotional 0% annual percentage rate (APR) doesn’t charge interest on purchases for a set time, called a promotional period. Because of this, you may be able to pay off debt faster if you use a 0% APR card. But it’s important to know when the promotional period ends and interest charges begin. 

What you’ll learn:

• With a 0% APR credit card, qualifying transactions don’t incur interest during the promotional period. 

• Promotional APRs have to last at least six months. 

• Missing a monthly payment or going over your credit limit could cause the offer to end early and trigger a higher penalty APR.

• Promotional APR offers are different from deferred-interest offers.

A 0% APR credit card is a card that doesn’t charge interest on qualifying purchases, balance transfers or both for a fixed amount of time, depending on the card’s terms. The card typically offers a 0% introductory rate—or intro rate for short—during this no-interest period, which is called a promotional period. 

By law, introductory or promotional periods have to last at least six months. But according to Experian, intro APR offers generally last 12 to 21 months.

Keep in mind that missing a monthly payment or going over your credit limit could cause the offer to end early and trigger a higher penalty APR. So it can help to understand the details of a card’s 0% APR offer before applying.

Here are two common ways you could use a credit card with 0% APR:

• Balance transfers: A balance transfer lets you move credit card debt from one card issuer to another. If a balance transfer credit card has a low or 0% introductory APR offer, you may be able to consolidate your debt to pay it down faster, save money on interest and simplify your monthly payments.

• Big purchases: You might use a 0% APR card to pay for a major purchase, like furniture or a laptop. If you repay the balance before the introductory period ends, you could avoid paying interest altogether.

A 0% promotional APR offer isn’t the same as a deferred interest offer. Here’s the difference:

• 0% APR: If a card has an unpaid balance after the promotional APR offer period ends, that balance will accrue interest starting from the day the promotional period ends. This is true as long as you’ve met the card’s terms and conditions of the offer along the way.

• Deferred interest offers: When a deferred interest offer ends, the card’s regular interest rate will apply. But that regular rate won’t apply exclusively to the remaining unpaid balance. As the Consumer Financial Protection Bureau (CFPB) explains, “If you do not pay off the entire balance of the promotional purchase you’ve made on your card, then interest going back to the date of the purchase will be added on top of the remaining balance.”

Knowing the difference can help you choose the right type of credit card and avoid unexpected charges.

According to the CFPB, “Credit card companies typically offer their best rates to customers who have the highest credit scores.” When deciding whether you qualify for a 0% intro APR offer, lenders often look at your payment history, credit utilization ratio and recent credit applications. 

Some issuers let you check for pre-approval offers before you apply. At Capital One, checking for pre-approval offers is simple, and it won’t impact your credit scores unless you decide to accept an offer.

A 0% intro APR offer lasts for a limited time. Once it ends, the card’s regular APR will apply to any outstanding balance. Generally, you can find your regular APR in your card’s terms and conditions.

Potential benefits of a 0% APR credit card include:

• Paying down debt faster: Transferring a balance from a higher-interest credit card to one with a 0% promotional APR could help you save on interest and pay off the balance faster. You might want to check your card agreement to see if balance transfer fees apply.

• Avoiding interest: If you meet the terms of the offer, you won’t be charged interest on qualifying purchases or balance transfers during the intro period. Remember, it may help to check balance transfer fees. Generally, you can find information about fees in your card’s terms and conditions.

• Paying for large purchases over time: You could use a 0% APR card to pay for a big purchase over time instead of all at once. If you repay your balance before the promotional period ends, you may avoid paying interest altogether.

But keep in mind that no interest doesn’t mean free money. You’ll still need to make payments, of course. And remember, the promotional rate won’t last forever.

If you’re thinking about applying for a 0% APR card, you could consider your financial situation and goals, and check the terms of the card, to decide if it’s the right move.

Here are answers to common questions about what 0% APR means.

Credit cards with 0% APR offer interest-free spending for a limited time. But it’s still important to read the card’s terms and conditions. That way, you’ll know what to expect during the promotional interest-free period—and what happens when the regular APR kicks in.

Ready to explore some options? Check out card offers from Capital One. Or see if you’re pre-approved. It’s quick and requires only some basic info. Plus, it won’t affect your credit scores.