Credit card debt is a curse that can be exceedingly difficult to dispel. Those struggling to deal with debt may find that interest payments cripple their efforts to pay down debt, thus perpetuating the vicious circle of indebtedness.
Of course, the underlying problem isn’t the credit cards or their users; it’s the fact that the necessities of life (housing, education, health care, etc) grow less and less affordable by the day, thus making the average person choose between credit card debt and generational immiseration, homelessness, early death, and other consequences of American poverty. However, there’s something you can do to minimize the interest that gets tacked onto your credit card debt: Get a credit card with a 0% introductory APR offer.
What Is A 0% Introductory Offer?
Many credit cards, both personal and business, come with introductory 0% APR periods. These periods typically last 9 to 12 months but can last for as long as 18-21 months. During this time, you won’t be charged interest on your debt.
Now, an intro 0% APR may not necessarily apply to all the debt you accumulate with the card in question. That’s why it’s important to distinguish between two common types of 0% introductory offers: those that apply to purchases and those that apply to balance transfers.
Balance Transfer Intro Rates VS Purchase Intro Rates
When you examine the details of your 0% introductory offer (always examine the details, folks!), you may find that the 0% APR offer applies to purchases. AÂ 0% introductory purchase APR is simple: For the length of the offer, you will not be charged any interest on the credit card debt you’ve accumulated via purchases. This leaves out the debt on your credit card that didn’t come from purchases, including balance transfers.
Accordingly, another type of popular credit card offer is the 0% introductory rate on balance transfers. With these offers, you can transfer a balance to your card and pay no interest on that balance for the length of the 0% APR period.
Now, many cards feature 0% introductory rates on both purchases and balance transfers. These cards are ideal if you’re looking to both avoid interest charges on your purchases and consolidate your existing credit card debt onto a card that won’t charge interest on that debt. Obviously, these cards are ideal for debt reduction purposes. Here’s what to keep in mind if you end up having to choose between the two:
- Get a card with an introductory 0% APR on balance transfers if you intend to use your card to pay down your existing high-interest credit card debt. An important caveat: These offers often restrict when you can make a balance transfer and have the intro 0% APR apply. For example, when you read the fine print, the offer may say “0% intro APR for 15 months on balance transfers made within 45 days of account opening.” This seems confusing and contradictory at first glance, but what it means is that in order to enjoy 15 months of not being charged interest on your balance transfer, you have to make that transfer within 45 days of opening your credit card account.
- Additionally, a credit card may charge you a balance transfer fee even if it doesn’t charge you interest on your balance transfer for a certain length of time. The balance transfer fee is entirely separate from the balance transfer APR. A common balance transfer fee policy is something like “Either $5 or 5% of the amount of each transfer, whichever is greater.” However, there are a few credit cards that offer both a lengthy intro 0% APR on balance transfers and no balance transfer fee. If you’re looking for a good card for debt consolidation, look for one of those!
- Get a card withÂ an introductory 0% APR on purchases if your goal is to cover a large expense (or a series of large expenses) while avoiding interest charges. An intro 0% APR on purchases will let you cover that medical emergency or vacation or car repair bill and then gradually pay for the expense over the course of your introductory 0% APR period without paying any interest.
Pros & Cons Of 0% Intro Offers
On the pro side, 0% intro APR offers can benefit you by letting you pay for large expenses over a specified length of time without paying interest and by letting you transfer balances to the card and not pay interest on said balance during the 0% APR period. You can even transfer other forms of debt to your card such as college loans and personal loans. Just don’t transfer more than you can pay down during the 0% APR period — otherwise, you could face steep interest charges after the intro 0% APR period ends.
As for cons, there are none. Unless you enjoy experiencing pain for the sake of experiencing pain — and that’s fine; I’m no kink-shamer — there is no downside to having smaller credit card bills than you would have otherwise.
The worst you could say about credit cards with long 0% intro APR offers is that they may possibly — but not necessarily — be lacking in other respects. For example, you may find a card that would save you money on interest payments after paying for your dog’s surgery, but whose annual fee would negate some or all of what you would otherwise save.
I’m not saying you should be wary of 0% introductory rates. I’m just saying there are other factors to consider when choosing the right credit card for your needs.
0% APR Intro Rates VS Deferred Interest
Deferred interest deals come with huge downsides and are not the same thing as introductory 0% APR offers. Let’s tackle the thorny subject of deferred interest.
Most major credit card issuers don’t offer deferred interest deals. These deals are most often found in store credit cards such as those issued by Walmart/Sam’s Club (I do believe in corporate-shaming).
What happens is this: You buy a refrigerator or a sewing machine under a deferred interest financing arrangement (it may be offered as “no interest for 12 months” or something). The terms of the deferred interest deal state that you won’t be charged interest on the purchase for 12 months unless you don’t pay off the purchase completely within that 12 months. If even a single cent of your purchase remains unpaid after 12 months, you’re then immediately hit with all the interest you would have been charged on the entire purchase over the prior 12 months.
In effect, your interest-free period is retroactively canceled.
This is not what happens with a genuine introductory 0% APR offer. With these offers, if you have a balance remaining on the purchases you made during the intro 0% APR period after the 0% APR period ends, you then become responsible for paying interest on the remaining balance in subsequent billing cycles. You are not retroactively charged for the interest that would have accrued during your 0% APR period.
For more on why deferred interest is a gilded scam from the predatory depths of exploitation hell, read our article about deferred interest and why you should avoid it.
Intro Rate Best Practices
The one thing you can do to get your intro 0% APR canceled is to miss a monthly minimum payment. When you miss a monthly payment, your card issuer will likely cancel your 0% APR period, thus subjecting you to the regular ongoing APR (or, worse, a penalty APR significantly higher than the regular ongoing APR) in subsequent billing cycles. Furthermore, your credit score will suffer damage. Try to make those monthly payments!
At a time when (according to the Federal Reserve) folks are drowning in more debt than ever before, any financial strategy that can result in less debt should be explored. Credit cards with long introductory 0% APR periods are obviously not a panacea for debt woes, but they can make a crucial difference in how much of your hard-earned cash you’ll be handing over to your creditors each month.
Still looking to save on interest payments with your next credit card? Check out these helpful resources!
- Best business credit cards with 0% APR offers
- APR vs interest rate
- Deferred interest explainer
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