What does 0% APR mean?

A credit card with a promotional 0% annual percentage rate (APR) means there’s no interest charged on purchases made with the card for a limited period. Because of the savings on interest, 0% APR cards can be a helpful tool to pay off debt. 

Nobody wants to pay more than they have to, especially when it comes to credit card interest. But how exactly does a 0% promotional APR work? And what are the pros and cons? Learn answers to those questions and more. 

What you’ll learn:

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

• Promotional APRs have to last at least six months. And they may last even longer. 

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

• Promotional APR offers are different from deferred interest offers. With deferred interest offers, interest accrues the entire time but is deferred until a stated offer end date.

A 0% APR credit card is a credit 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.

The introductory or promotional period has to last at least six months. But it could be longer—often from 12 to 21 months. You can end the 0% APR period 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 may use a credit card with 0% APR. 

• Balance transfer: A balance transfer lets you move credit card debt to another issuer. 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: A 0% APR credit card is one way to pay off a large purchase, like furniture or appliances, over time. And if you pay off the card’s entire balance before the introductory period ends, you could avoid paying interest on the purchase altogether.

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% APR means that there are no interest charges on certain transactions during a fixed period. When it comes to credit cards, 0% APR is often associated with the introductory rate that may be available when you open a new account.

A 0% promotional APR offer isn’t the same as a deferred interest offer. Here’s how they differ.

• 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—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 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.”

0% promotional APRs last for a limited time. So it’s important to understand how long the promotional period will be for the 0% APR card you apply for. This way, you’ll know how much time you have to pay down your balance before interest charges might kick in.

Once the promotional APR period ends, the card’s standard APR will apply. And if you’re carrying a balance on the card, you’ll start to see the card’s standard rate applied to the balance.

It’s important to understand the potential pros and cons of low introductory APR offers, especially if you’re using a low APR credit card as a tool to help improve your finances.

Here are some potential benefits of using a 0% APR credit card.

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

• Pay 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 the debt gets paid off faster.

• Pay 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 upfront.

Here are a few possible drawbacks of a 0% APR credit card.

• 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: Just because there’s no interest doesn’t mean there are no fees related to an offer. Some cards might charge a balance transfer fee, for example.

• Penalty APR: There may be a penalty APR after a late or missed payment, which is 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 may catch your eye with promises of interest-free spending. That may be possible. 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.