Pros and cons of zero APR credit cards


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With so many different credit card perks and introductory offers available, you may find yourself wondering, “Is 0% APR good?”

It’s a great question. As with most things, there are both pros and cons to 0% APR credit cards.

Here’s what you need to know to help you decide if a 0% APR credit card is a good addition to your wallet.

Pros of 0% APR credit cards

A 0% APR credit card gives cardholders an introductory period — usually 6-21 months — during which they won’t accrue interest on their credit card balance. This time period can be extremely helpful if your goal is to pay down credit card debt.

Pay off large purchases without interest

If you know you have a large purchase coming up that you won’t be able to pay off immediately, a 0% APR credit card can give you some extra time to pay off the purchase without accruing any interest.


Pay down an existing balance without accruing interest

If you’re carrying a balance on another credit card, you may be able to transfer that balance to your 0% APR credit card. Then, you can work on paying down the balance without accruing any more interest.

Related: The best 0% APR credit cards

Improve your credit score

Paying down debt can help boost your score since 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.

Earn rewards

Some no-interest credit cards offer additional rewards programs, such as cash back or rewards points, which can lead to more savings. This can include a welcome offer and cash back or rewards points based on each dollar you spend.

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For example, no-annual-fee Chase Freedom Unlimited earns you at least 1.5% cash back on all purchases while offering a generous introductory APR period.


Cons of 0% APR credit cards

Of course, a 0% APR credit card does have some drawbacks.

0% doesn’t last forever

It’s important to remember that the introductory 0% APR period will eventually come to an end. If you haven’t paid your balance in full by the time it does, you’ll be hit with interest on that balance when the period is over.

Related: What happens when 0% APR ends?

Balance transfer fees

If you want to transfer your balance from another card to your 0% APR credit card, you’ll be charged a balance transfer fee. It’s usually 3%-5% and likely much lower than the APR you’re already paying since the current average credit card APR is over 20%. Still, you should factor in that fee if you’re considering a balance transfer as a solution to pay off your credit card debt.


Strict terms and conditions

Be sure to read your card’s terms and conditions. Some cards only apply the 0% APR offer to new purchases and don’t extend it to balance transfers, for instance. Also, most of them will cut your 0% APR period short if you have a late payment. Know the terms of your offer to avoid any unpleasant surprises.

False sense of security

At TPG, we recommend paying off all credit card balances in full each month. No amount of credit card rewards will be able to offset the interest you’ll accrue if you’re overspending on your credit cards. If a period of not accruing interest will tempt you to spend more than what you can pay off, a 0% APR credit card may do more harm than good.

Related: TPG’s 10 commandments of credit card rewards

Is 0% APR worth it?

Whether 0% APR is worth it depends on your financial goals and habits. If you can pay off or significantly pay down your credit card balance during the 0% APR period, getting a credit card with this offer can save you some serious money and keep you from having to pay unwanted interest.

However, if not accruing interest will tempt you to spend more than you can pay on your credit card, it definitely won’t be worth it in the end.


Related: How to avoid and reduce credit card interest

Bottom line

A 0% APR credit card is a great option for someone who wants to pay off a credit card balance without accruing interest. However, it’s not the perfect solution for everyone. Before applying, make sure to consider the card’s terms and your own debt payment plan to ensure you’ll benefit from your 0% APR credit card.

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