The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for . The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Terms apply to the offers listed on this page. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.
- A 0 percent intro APR card can help you consolidate and pay down debt faster — without interest payments — if you're disciplined in how you use it.
- These cards typically come with a balance transfer fee, and you risk losing the 0 percent intro APR if you're late with a payment.
- If you can't pay off what you transfer before the intro period ends, you'll pay much higher interest on the remaining balance.
Whether any credit card can positively affect your finances depends on how you use it. A 0 percent intro APR or balance transfer card can be a godsend if you make the right moves. If not, you could regret signing up for years to come.
Before you compare and choose a 0 percent APR credit card, it can help to know the potential advantages and disadvantages of these cards. Not only can this inform your decision when it comes to which new card to get, but arming yourself with information can help you avoid ending up in worse debt than you began with.
Pros of 0% intro APR credit cards
The main advantage — avoiding interest — is obvious, but other potential upsides are more subtle. Consider these pros before you apply for a zero-interest credit card.
Save money on interest
This one shouldn’t surprise you, but 0 percent intro APR credit cards can help you save considerable sums of money on interest. This would be true regardless, but it’s especially true if your alternative is a traditional credit card, given the average credit card interest rate is more than 20 percent.
How much could you save? Imagine you have $4,000 in credit card debt at a 20 percent APR — or annual percentage rate — and you decide you can pay $200 each month. In this scenario, it would take you 25 months to become debt-free, and you’d fork out $906 in interest along the way.
Now consider a 0 percent intro APR card: If you paid $200 per month on such a card, you could become debt-free in 20 months with $0 in interest paid. That assumes your introductory offer is at least 20 months, which is in line with some of the best offers available right now. The Wells Fargo Reflect® Card, for example, offers a 0 percent intro APR for 21 months from account opening for purchases and for any qualifying balance transfers made in the first 120 days. After the intro APR offer ends, a 18.24%, 24.74% or 29.99% percent variable APR applies. A 5 percent balance transfer fee applies to all balance transfers.
Consider using Bankrate’s credit card payment calculator to plug in your balance and interest rate and see how much you can save with a 0 percent intro APR card.
Lower your monthly payments
While interest savings could be your goal, going from a higher rate to a 0 percent intro APR can also lower your required credit card payment each month.
But remember, your credit card’s APR will pick up at your card’s regular rate after your intro APR period ends. In other words, your lower monthly payment may not last long.
Pay down debt faster
Without any interest charges added to your bill each month, every cent you pay toward your debt goes directly toward your principal balance.
Enjoy perks and rewards on spending
Another benefit is that some credit cards with a 0 percent intro APR also let you earn rewards on purchases. This can include a welcome offer and cash back or rewards points based on each dollar you spend.
Improve your credit score
Finally, using any credit card responsibly can help you improve your credit score. Paying down debt can help boost your score because it lowers your credit utilization ratio, and making on-time payments on your card is the most important factor used to determine your FICO credit score.
Cons of 0% intro APR credit cards
While there are many benefits to consider with 0 percent intro APR credit cards, using your card the wrong way can cost you money. Here are the main potential downsides of using this type of credit card.
Late payments can foil your plans
First, understand that making a late payment on a 0 percent intro APR credit card can forfeit you the card’s introductory APR period. This is because late payments are normally a violation of the introductory offer terms. You may even end up paying a penalty APR that’s higher than the card’s standard variable APR if you’re late with or miss a payment.
New credit cards can temporarily impact your credit score
Applying for a new credit card results in a hard inquiry on your credit report that can ding your credit score. But keep in mind that the impact is temporary and minor. Unless you need to keep your credit in tip-top shape because you’re applying for a loan soon, you needn’t worry about a slight decrease in your score.
Balance transfer fees can apply to transferred debt
If you plan to use a 0 percent intro APR credit card to consolidate high-interest debt, you’ll owe a balance transfer fee that typically falls between 3 percent and 5 percent of the amount you transfer.
While paying this fee may be well worth it for the interest savings, it’s still important to understand that balance transfers are seldom free.
Intro APR periods don’t last forever
Zero-interest offers are for a limited time only — anywhere from 12 to 21 months, depending on the card. When the intro period ends, the remaining balance you owe will begin racking up debt at your card’s regular variable rate.
Remember that credit cards typically charge higher interest rates than other financial products, like personal loans and home equity loans.
Zero-interest offers can make you complacent
Last but not least, carrying debt at a 0 percent APR can give you a false sense of security. Since you know interest isn’t accruing on your purchases, your transferred debts or both, it’s easy to become complacent and pay less each month than you should.
Credit cards with a 0 percent intro APR — especially those with rewards — can even entice you to spend more than you planned.
When getting a 0% intro APR credit card makes sense
If you’re responsible with your finances and want to save money on interest for a limited time, a 0 percent intro APR credit card can be a boon for your finances. Consider signing up for one of these cards if:
- You’re planning to make a large purchase and believe you can pay off the full charges within the card’s introductory period.
- You’re serious about getting out of debt, and you have a plan to pay off all or most of your balance during the card’s introductory period.
- You’re in between jobs or recently faced unexpected expenses, and you want a card that gives you time to pay down new balances interest-free.
- You’re disciplined enough to avoid racking up new balances you can’t comfortably afford to pay off.
- You consistently make on-time payments on credit cards and other bills without a problem or hardship.
When you shouldn’t get a 0% intro APR credit card
The following scenarios can indicate that a 0 percent intro APR card might cause more trouble than it’s worth:
- Credit card debt is a major issue in your life, or it was a major issue in the past.
- You’ve struggled to pay bills on time before and worry it will happen again.
- You’re concerned a new credit card could tempt you into overspending.
- You want to move your debt to a card with a 0 percent intro APR so you can spend more on your old cards.
If you’re nodding your head at any of these issues, you’re better off skipping 0 percent intro APR credit cards. You may even want to avoid taking on any new lines of credit at all — at least until you can develop a plan for your finances.
Alternatives for debt consolidation
If you have credit card debt already and need to consolidate, consider alternatives to credit cards. For example, a personal loan would let you pay a fixed monthly payment with a fixed interest rate, and you’ll know exactly when you’ll be debt-free from the start. In addition, personal loans don’t make it easy to rack up new charges as credit cards do.
If you’re a homeowner who’s built equity in your home, a home equity loan or home equity line of credit (HELOC) might be helpful for consolidating your debts. Either option is likely to offer a lower interest rate than traditional credit cards do, but keep in mind these types of loans are secured by your home.
Whatever you decide, remember that your old debts and new charges won’t go away on their own. A 0 percent intro APR credit card can help you save money and buy you some time, but the rest is up to you.
The bottom line
When used correctly, a 0 percent intro APR credit card can not only save you hundreds of dollars in interest fees, but also help you reach your debt payoff goal even sooner. There are other advantages, too, such as additional consumer protection and earning rewards. But these cards come with stipulations, like forfeiting the 0 percent intro APR offer if you’re late with a payment as well as balance transfer fees that range from 3 percent to 5 percent of each balance you transfer.
If you’re disciplined in how you use the card and are fully aware of the upsides and downsides, a 0 percent intro APR credit card can be an excellent tool for your personal finances. To get started, consider our list of the best 0 percent intro APR credit cards on the market today to easily compare your options.