Get 0% APR credit cards to save money — here's how it works

If you're opening a new credit card, these 0 percent APR bonuses may be a factor to consider. (iStock)

It’s no surprise that credit card interest charges can add up. Some credit cards charge an APR, or annual percentage rate, that’s over 20 percent. However, 0 percent APR credit cards can offer a break from mounting interest charges by giving you the chance to pay down your balance without incurring interest for a certain period of time.

If that sounds of interest to you, keep reading. Below is an explanation of 0 percent APR, how these cards work, and how you can benefit from opening one at the right time. Use this post as a guide to help you determine whether getting a 0 percent APR credit card might be the right choice for you.

What does 0 percent APR mean?

Above all, 0 percent APR credit cards help you save money. They do this by allowing you to avoid paying interest charges for a certain period of time, usually between 12 and 21 months. However, after the promotional time period is over, it’s important to note that you will have to pay interest on any balances that you have left on the card. 


In particular, those who want to pay down high-interest credit card debt or those who are planning on making a large purchase in the near future are most likely to benefit from using these cards. Ideally, the lack of interest charges will give you greater opportunity to pay down the resulting balance and allow you to pay it off in full before the promotional interest rate period ends. 

How to use 0 percent APR credit cards

Not all 0 percent APR cards are created equal. There are two distinct types of 0 percent APR credit cards to choose from. You’ll want to be sure to read the card’s terms and conditions carefully, so that you end up with the type that’s the best fit for you:

0 percent APR on balance transfers 

The first type of 0 percent APR credit cards offers a promotional interest rate on balance transfers. Balance transfer cards are a method of debt consolidation. They occur when you move outstanding debt - or your existing balance - from one credit card to another. With this type of card, you won’t be charged interest on any debt that you’ve transferred for the length of the promotional period. 

That said, most cards do charge a fee for the privilege of moving debt from one card to another. You’ll need to read the card’s terms and conditions to find out the extent of the fee that you’ll be charged. However, it usually amounts to between 3 and 5 percent of the balance that’s being transferred.


0 percent APR on purchases

In contrast, a card that advertises 0 percent APR on purchases is best if you’re planning on taking on new debt from a big purchase. In this instance, you won’t be charged interest on any new purchases you make with the card until the promotional rate period ends.


Keep in mind that in order to take advantage of the low rate, you’ll need to make at least the minimum payment on the card each month. Otherwise, you could be charged a penalty APR, which could be much higher.   

In addition to choosing the right type of 0 percent APR card, you should also make sure to pay attention to the length of the promotional interest rate period. This information will be located in the card’s Schumer box, a table that outlines its rates and fees. Doing so will ensure that you’re aware of how long you have to pay down your balance before the regular interest rate starts to take effect.

When should you get a 0 percent APR credit card?

The decision of when to get a 0 percent APR card will depend on two things: the amount of interest you’re paying on your existing balances and your plans for future purchases. If you’re focused on opening a card that offers 0 percent APR on new purchases, you’ll want to open the card before you head to the store. 


On the other hand, if you’re planning on getting a card that offers 0 percent APR on balance transfers, looking at how much you pay in monthly interest will show you how much you stand to save each month with your new card. Ideally, you’ll want to open the card at a time when you can afford to pay off your balance before the promotional period ends.