What does 0% APR mean?

“0% APR” on a credit card means there’s a zero annual percentage rate, or no interest. Rates that low are typically limited to a promotional period. But even with a higher rate, there are other ways to avoid paying interest.

What you’ll learn:

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

• Promotional APRs have to last at least six months. 

• Missing a monthly payment or going over your credit limit could cause promotional offers to end early and trigger a penalty APR.

• Promotional APR offers are different from deferred-interest offers.

A 0% APR credit card is one that doesn’t charge interest on qualifying purchases and transfers for a fixed amount of time. The no-interest period is called a promotional period. If the rate is tied to a new cardholder offer, it might be called an introductory rate, or intro rate. 

By law, introductory or promotional periods have to last at least six months. But intro APR offers could last longer. When the promotional period is over, the card’s standard rate will go into effect and could be applied to the outstanding balance.

0% APR doesn’t mean you don’t have to make a minimum payment every month. The Consumer Financial Protection Bureau (CFPB) says it’s important to pay the minimum by the due date each month. Plus, depending on your card agreement, missing a monthly payment or going over your credit limit could cause the promotional period to end early and trigger a higher penalty APR.

Here are two common ways you could use a credit card with 0% APR:

• Balance transfers: A balance transfer lets you move credit card debt from one card issuer to another. If a balance transfer credit card has a 0% introductory APR offer, you may be able to consolidate your debt to pay it down faster, save money on interest and simplify your payments.

• Big purchases: You might use a 0% APR card to pay for a major purchase like furniture or electronics. If you repay the balance before the introductory period ends, you could avoid paying interest altogether.

Promotional rates may not apply to all transactions. Some transactions, such as cash advances, have APRs that are higher than regular rates.

Once a 0% APR promotional period ends, the standard APR typically applies to any outstanding balance.

0% promotional APR offers aren’t the same as deferred interest credit card offers. Knowing the difference can help you choose the right type of credit card and avoid unexpected charges.

• 0% APR: If a card has an unpaid balance after the promotional APR offer period ends, that balance will accrue interest starting from the day the promotional period ends. This is true as long as you’ve met the card’s terms and conditions of the offer along the way.

• Deferred interest offers: When a deferred interest offer ends, the card’s regular interest rate will apply. But that regular rate won’t just 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.”

According to the CFPB, credit card issuers typically offer their best rates to customers with the highest credit scores. When deciding whether you qualify for a 0% intro APR offer, lenders might consider your payment history, credit utilization ratio and recent credit applications. 

Some issuers let you check for pre-approval offers before you apply. At Capital One, checking for pre-approval offers is simple, and it won’t impact your credit scores unless you decide to accept an offer.

Potential benefits of a 0% APR credit card include:

• Paying down debt faster: Transferring a balance from a higher-interest credit card to one with a 0% promotional APR could help you save on interest and pay off the balance faster. You might want to check your card agreement to see if balance transfer fees apply.

• Avoiding interest: If you meet the terms of the offer, you won’t be charged interest on qualifying purchases or balance transfers during the intro period. Remember, it may help to check balance transfer fees, and you may need to make a minimum payment on time by the due date to maintain the intro APR. Generally, you can find information about fees in your card’s terms and conditions.

• Paying for large purchases over time: You could use a 0% APR card to pay for a big purchase over time instead of all at once. If you repay your balance before the promotional period ends, you may avoid paying interest altogether.

0% APR can be a good option if you want to avoid paying interest on new purchases. It might also be an option for paying off existing debt. But if you can’t pay off the card’s full balance before the promotional period ends, you could still end up paying interest.

Credit cards with 0% APR offer interest-free spending for a limited time. If you read the card’s terms and conditions, you’ll know more about what to expect during the promotional period and what happens when the standard APR kicks in.

Ready to explore some options? Check out Capital One credit cards and see whether you’re pre-approved. It’s quick and requires only some basic info. Plus, it won’t affect your credit scores.