1/25/2023
Today's credit cards offer various benefits to consumers with the intention of attracting more customers to these banking products. One of these widely advertised benefits is the 0% introductory APR (Annual Percentage Rate) for a certain number of months or billing cycles.
If you still don't understand how this feature works, here we clear it up for you, and show you the best 0% APR credit cards for balance transfers and purchases.
What does 0% APR on a credit card mean?
When a card has 0% APR for X amount of time, it means that you pay no interest for the specified term (usually 6 to 21 months) for any purchase or balance transfer.
Once that "grace period" ends, the normal interest rate goes into effect, which is also usually stated in the promotion or terms of the credit card.
- Annuity: $ 0
- Credit limit: $ 150
- APR: 17.49%
- Annuity: $ 0
- Credit limit: Ask
- APR: 19.49%
- Annuity: $ 0
- Credit limit: Ask
- APR: 22.49%
- Annuity: Ask
- Credit limit: Ask
- APR: 20.24%
- Annuity: Ask
- Credit limit: Ask
This 0% APR does not always apply to all the transactions you can carry out with your credit card. In most cases, purchases and balance transfers are the ones that receive this rate, but not cash advances.
Although it is possible to get plastics that do not charge you for the balance transfer, this action usually includes a fee that varies according to the bank.
If you want to know the details about a 0% APR offer, you should check the corresponding Schumer Box that appears in the terms and conditions of the credit instrument. That's where the details about interest rates and other fees are located. All of this is described according to the type of transaction.
You also need to keep in mind that, when the 0% grace period is over, if you still have an outstanding balance to repay, you will have to pay interest from the next month.
For example, you have already spent 6 months of the 12 months you have and you decide to buy a TV with 8 installments. This means that you will only pay the normal APR for the last 2 months. If for some reason you do not pay for the purchase during the zero interest period, there is no retroactivity on the 6 months you have left.
Features of zero interest credit cards
The 0% APR promotion can be a deciding factor when choosing a new credit card or one for which you are pre-approved.
However, be aware of the fine print or those clauses that are often left out. This way, you'll know you're making a good decision and will be able to get the most out of it.
You may be interested in: Best secured credit cards
Before choosing a card with this offer, consider the following:
You still have to meet the minimum payment
Credit cards work on a cutoff date and a payment date. Whether you have accumulated a balance, financial institutions will charge you a minimum in each billing cycle.
In this case, we recommend you to be attentive to your account, know if there is a minimum established in the terms and conditions, and try to automate the process to avoid any penalties.
You may lose the 0% offer
The main idea of getting one of these credit cards is to be able to take advantage of the interest-free grace period. It does you no good if they cancel this benefit and then you are left with a higher APR than your other credit cards.
This can happen if you are late in your monthly payment once or as established by the bank. That is why many experts insist on paying on time.
Credit utilization impacts your FICO score.
Often, people don't consider what this factor represents for credit history. In fact, credit utilization makes up 30% of your credit score and must be watched to avoid losing points.
If your plastic has a $15,000 limit and you make balance transfers up to $10,000, your credit utilization would reach 66%, something that is not well regarded by the bureaus. The ideal is to keep this value between 30-40%.
Balance transfers fees
In combination with the above, balance transfers generally have a certain cost. It is usually a percentage of the amount that is between 3 and 5%, which represents about $30-$50 for each thousand that you transfer to the card with 0% APR.
These are charges that add to the debt and that you should estimate well to know if the operation is justified or not.
Many interest-free credit cards also give you rewards
With the intention of making the offers more attractive, many credit cards include the accumulation of points, cash back and other rewards to make you spend more. This dynamic may conflict with your financial goals.
If you want to consolidate debt, you don't need these rewards. If you are shopping, these rewards benefit you as long as you spend wisely.
0% APR credit cards can be very useful if you know their subtleties and understand their terms. For these and other reasons, Busconómico reviews the most highly rated credit cards on the market.
Español: Tarjetas de crédito sin intereses al inicio (0% APR)