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Are 0% APR Interest Credit Cards Worth It?
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Courtney (She/Her)
Certified Credit Union Financial Counselor
Posted September 29, 2022
One of the biggest factors to consider when taking out a loan or opening a new credit card is the interest rate you’ll be assessed. This is why 0% APR interest loans or credit cards are so enticing. Below we’ll break down why many are drawn to these offers and a few things to check for in the fine print.
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The benefits
Who wouldn’t want to be able to borrow money without having to pay any interest? Some people use 0% APR to consolidate debt with the goal of paying it off faster while others turn to them for specific purchases. If you’re carrying high-interest credit card debt, paying it off can seem impossible when you see what is going toward interest vs. your principal balances, making 0% APR helpful. It can also be useful when making larger purchases to give you time to carry the balance and space out paying it off without paying the interest that would normally come with it.

Typically when taking out a 0% APR credit card or loan, there is a set duration before interest accrues. This can range from six months to two years depending on the type of loan or card, and the provider.
The fine print
If avoiding paying interest sounds too good to be true, it’s because it can be if you don’t know everything you’ve agreed to in order to escape doing so. Understanding what types of transactions qualify as 0% APR, the requirements to maintain 0% APR, and what happens to remaining balances are just a few things to consider.

     - Transaction types: Some 0% APR offers only pertain to certain transactions such as purchases, balance transfers, or cash advances. Before opening a credit card or loan for a specific purchase, do your research to see if it qualifies.
     - Requirements: Some lenders will cancel the 0% APR for a variety of reasons including missing a payment or going over your limit resulting in your balance then accruing interest at a much higher rate.
     - Fees: Some credit cards that offer 0% APR to transfer balances from other credit cards with higher rates will assess a fee for doing so. This may be a certain percentage of the amount transferred or a set fee. Sometimes the fee can end up costing more than would have been paid in interest elsewhere.
     - Remaining balances: It’s not uncommon for those with a remaining balance after the 0% APR timeframe has ended to have interest accrue at the regular APR. Depending on the rate and remaining balance, this could end up costing more than what would have been paid using another option.
     - Retroactive interest: In addition to interest accruing on remaining balances, some lenders will charge retroactive interest. This means instead of actually receiving 0% APR on your credit card, it was technically just deferred during the time period and then assessed afterwards.
Sources:
https://www.nerdwallet.com/article/credit-cards/pros-cons-0-interest-credit-card
https://www.cnbc.com/select/how-do-0-apr-credit-cards-work/
https://www.bankrate.com/finance/credit-cards/zero-interest/
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