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Summary of the Best 0% APR Credit Cards

*5% cash back categories have a $1,500 max spend and require quarterly activation

How 0% APR Credit Cards Work

Credit card companies use promotional interest rates (also called “teaser” rates or introductory rates) to attract new customers. The premise is simple: For a designated period of time (usually between six months and 18 months), any charges on the card will not accrue interest as long as you make timely minimum payments.

(Often, these promotional 0% APRs apply to balance transfers, too, but here let’s focus on using the 0% credit cards for new purchases).

Let’s say you charge $5,000 to a credit card with the intention of repaying the balance over a year. Ordinarily, at a 15% APR, you would pay $416 in interest paying the card off in 12 payments of $451.

With a 0% introductory APR, you could make minimum payments as low as $100 each month and not pay any interest in the first year. Of course, you would then need to have the cash to pay the entire balance before the promotional APR expires—otherwise interest would begin to accrue at the card’s regular APR.

The Pros and Cons of 0% Credit Cards for Purchases

Pros of Making Purchases with 0% Credit Cards

• Make a major purchase with a temporary interest reprieve. You could make a significant purchase with your credit card, such as a home improvement project, and it won’t cost you a dime of interest as long as you repay the balance before the promotional interest rate expires.
• Earn extra money through cash back and sign-up bonuses. Some credit cards offer not only a low intro APR, but also cash back on your purchases and a bonus for spending a certain amount on the card in the first few months. So if you can pay off your purchase before the intro 0% APR expires, you’ll actually earn money for having purchased something you were going to buy anyway.

Cons of Making Purchases with 0% Credit Cards

• It’s still a financial risk. There’s the chance you’ll have trouble making payments and actually not be able to pay the card off before the 0% period comes to an end, costing you interest after all.
• The 0% rate is conditional. Miss a payment — even by just a day — and the bank may nullify the 0% promotional rate.
• There are credit implications. You’ll typically need very good credit to be approved for a new card. And taking on a sizable credit card balance will increase your credit utilization, which may hurt your credit score until the balance is paid off.

Summary

If you have no other credit card debt, a solid credit score, and an emergency fund big enough to last for several months’ expenses, you might be in a good position to use a 0% purchase APR promotion. But think about what purchase(s) you plan to make with the card.

• Are the purchases absolutely necessary? For example, did your refrigerator die, or do you just want a new fridge because you’re tired of the old one? Does your pet have a veterinary emergency?
• Are the purchases investments in yourself, your career, your business, or your home?

If you can answer yes to the above, you can feel pretty good about using a 0% credit card as a tool for buying something interest free and then paying off the balance over the course of the card’s promotion length. If not, you may want to reevaluate why you’re willing to take on debt to buy things that aren’t entirely necessary.

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