What does 0% APR mean?

Nobody wants to pay more than they have to, especially when it comes to credit card interest. And if you have a credit card with a 0% promotional annual percentage rate (APR), you may be able to avoid interest charges for a limited period of time. 

But how exactly does a 0% promotional APR work? And what are the pros and cons? Find out the answers to these questions and more.

Key takeaways

• With a 0% promotional or introductory APR, qualifying transactions won’t accrue any interest during the promotional period as long as all credit card terms and conditions are met. 
• 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. 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 0% APR credit card. 

• Balance transfer: A balance transfer lets you move credit card debt to another issuer. This can help with consolidating debt and simplifying payments. Plus, 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.

According to the Consumer Financial Protection Bureau (CFPB), “Credit card companies typically offer their best rates to customers who have the highest credit scores.” But each credit card issuer has its own criteria for creditworthiness. 

If you’re curious about how you can work toward an excellent credit score, check out these tips to improve your credit scores.

If you want to see whether you’re likely to be approved for a card before applying, consider getting pre-approved. Getting pre-approved for Capital One credit cards is quick and only requires some basic info. Plus, it won’t affect your credit scores because it only requires a soft inquiry.

0% APR means that there are no interest charges on certain transactions during a fixed period of time. 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 just 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 are for a limited time—they don’t last forever. Promotional APR periods must last at least six months. But they can be longer.

A card’s standard APR will apply when the promotional APR period ends. And if you’re carrying a balance on the card, you’ll start to see the card’s standard rate—typically a variable APR—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 of the 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 that 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.

Credit card offers with 0% APR may catch your eye with their promises of interest-free spending. And depending on the card, the promotional APR may be for certain purchases, balance transfers or both. 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.