What does 0% APR mean?

A credit card with a promotional 0% annual percentage rate (APR) comes without interest charges on purchases made with the card for a limited period. Because of this, you may be able to pay off debt faster if you have a 0% APR card. But it’s a good idea to know when the 0% APR period ends and the interest charges start. 

What you’ll learn:

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

• Promotional APRs have to last at least six months by law, but they may last longer. 

• Missed or late payments could cause the 0% promotional period to end and trigger a higher penalty APR.

• Promotional APR offers are different from deferred interest offers.

A 0% APR credit card is a card that charges no interest on qualifying purchases, balance transfers or both for a fixed amount of time. This no-interest period is called a promotional period. If the promotional period is based on opening a new account, it may be referred to as an introductory period.

By law, introductory or promotional periods have to last at least six months. But they can be longer and could last 12 to 21 months. 

You can cause the 0% APR period to end early and trigger a higher penalty APR if you do things like make late payments. So it helps to fully 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 transfer: A balance transfer lets you move credit card debt from one issuer to another. This can help consolidate debt and simplify payments. If the balance transfer card has a low or 0% introductory APR offer, you may be able to pay the debt down faster and pay less in interest overall. 

• Large purchases: You might buy something big, like furniture or a laptop. If you repay the balance before the introductory period ends, you could avoid paying interest on the purchase altogether.

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

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

• Deferred interest offers: When a deferred interest offer ends, the card’s standard interest rate will apply. But that standard rate won’t only apply to the remaining unpaid balance. As the 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.”

The Consumer Financial Protection Bureau (CFPB) says that “credit card [issuers] typically offer their best rates to customers who have the highest credit scores.”

When considering whether to offer a 0% APR, issuers look at things like payment history, credit utilization and recent credit applications. Some issuers let potential cardholders check if they’re pre-approved for 0% APR cards before they apply. At Capital One, checking for pre-approval offers is simple, and it won’t impact your credit scores.

0% promotional APRs last for a limited time. Once the promotional APR period ends, the card’s standard APR will apply. If you’re carrying a balance on the card, you’ll start to see the card’s standard rate applied to the balance.

There are pros and cons to 0% introductory APR offers. Potential benefits of using a 0% APR credit card include:

• Paying no interest: If you meet the terms of the offer, you won’t be charged interest on qualifying transactions during the promotional period.

• Paying down debt faster: If you transfer a balance from a credit card with a higher interest rate to one with a 0% promotional APR, you won’t be charged any interest during the promotional period. And that could mean you can pay off the debt faster.

• Paying for large purchases over time: You can pay for big-ticket items over time, potentially without paying any interest at all, instead of paying the entire cost up front.

Possible drawbacks of a 0% APR credit card include:

• 0% APR is only temporary: 0% APR only lasts for a limited time. The card’s standard APR will apply once the promotional period ends.

• 0% APR may not apply to everything: Some transactions, such as cash advances, may still accrue interest during the promotional period.

• Fees: No interest doesn’t mean no fees. Some cards might charge a balance transfer fee, for example. 

• Penalty APR: There may be a penalty APR after a late or missed payment. It’s typically higher than the standard APR that kicks in after the promotional period.

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

Credit card offers with 0% APR offer interest-free spending for a limited time. But it’s still important to do some homework so you’ll know exactly what to expect during and after the promotional interest-free period.

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