Key takeaways
- Some bank cards supply a 0 p.c intro APR on each purchases and steadiness transfers, whereas different playing cards solely supply the intro APR on one or the opposite.
- For those who’re fascinated about a bank card with an intro APR supply, you’ll want to learn the phrases rigorously. Intro APR gives solely final for a particular time period, and also you’ll usually must switch any balances throughout the first few months of account opening to qualify.
- Your 0 p.c intro APR supply will be canceled for those who don’t handle the account responsibly.
There’s a great likelihood you’ve heard about bank cards that provide a 0 p.c introductory annual share price (APR) at one level or one other. Maybe you acquired a preapproved bank card supply within the mail, or perhaps you noticed a business about steadiness switch bank cards which might be geared towards serving to you pay down debt. However regardless of the place your data of these kinds of playing cards got here from, it’s vital to know what a 0 p.c intro APR card can do — and what it may well’t.
A bank card with a 0 p.c intro APR supply could be a useful device, however for those who’re deep in debt, it may well’t robotically make your monetary woes disappear. In actual fact, there are many issues to find out about zero curiosity playing cards earlier than you apply to be able to get essentially the most out of your bank card and keep away from some frequent pitfalls.
1. You’ll nonetheless have a month-to-month minimal cost
First off, you must know that intro APR bank cards nonetheless require you to make a minimal cost every month. This cost gained’t embody any curiosity on balances that qualify for the 0 p.c intro APR supply, but it surely’s due simply the identical.
This may be seen as each a blessing and a curse. Positive, being eligible for an intro APR supply doesn’t get you off the hook relating to making a cost in your card. Nonetheless, the truth that no curiosity is accruing does imply every greenback you pay goes straight towards the principal of your steadiness. With none curiosity due, making funds lets you repay your debt extra shortly.
2. Your intro APR might apply to steadiness transfers, purchases or each
One other frequent false impression about 0 p.c intro APR bank cards is the concept that they allow you to skip curiosity no matter how you employ your card. The fact is sort of totally different, and also you’ll discover this once you start evaluating bank cards.
Bank cards with these promotions will supply their 0 p.c intro APR for both purchases, steadiness transfers or each. However even when a card does supply a 0 p.c intro APR on each purchases and steadiness transfers, it’d supply every promotion for various lengths of time.
What does this imply for you? For those who get within the behavior of creating purchases on a card that solely applies a 0 p.c intro APR to transferred balances, you might shortly discover that curiosity is accruing in your card. This is because of the truth that your card is charging totally different charges on steadiness transfers versus new purchases, but additionally since you usually don’t qualify for a grace interval on purchases once you’re carrying a steadiness.
To search out out the phrases of your introductory APR supply and the way curiosity might be charged in your card, learn the wonderful print on the bank card you’re contemplating. For instance, the intro APR supply phrases for the Citi Double Money® Card, a preferred steadiness switch card, are as follows:
- New cardholders can get a 0 p.c intro APR on steadiness transfers for 18 months. Adopted by an APR of 18.24% – 28.24% (Variable).
- Stability transfers should be made within the first 4 months of account opening to qualify for the intro APR supply.
- A 3 p.c intro steadiness switch price (minimal $5) applies to balances transferred throughout the first 4 months; after that, a 5 p.c steadiness switch price applies.
- There isn’t any intro APR supply for purchases.
3. Your 0% APR will be canceled
Right here’s one other vital element: For those who qualify for a 0 p.c intro APR supply in your bank card, however your month-to-month cost is late, you might develop into ineligible for the intro APR supply instantly. This implies you may go from paying a 0 p.c APR in your bank card steadiness to the variable price that your card fees in a single day.
That’s one good cause to all the time pay your bank card invoice early or on time. One more reason to take action is that your cost historical past is a very powerful issue affecting your FICO credit score rating.
4. Stability switch charges can eat away at your financial savings
Earlier than you switch a steadiness to a bank card that gives a 0 p.c intro APR for a restricted time, you ought to be conscious of any steadiness switch charges you’ll need to pay. These charges are usually 3 p.c or 5 p.c of every steadiness you need to switch, with a minimal cost that usually ranges from $5 to $10.
For instance, for those who needed to switch $10,000 in debt from a high-interest bank card to a card with a 0 p.c APR supply and a 3 p.c steadiness switch price, you’d have $300 added to the steadiness of your card on prime of the $10,000 debt you simply transferred.
Whereas paying a steadiness switch price could make monetary sense as a result of curiosity financial savings you may obtain with a 0 p.c intro APR supply, you’ll nonetheless need to issue these charges into your debt payoff plan.
5. You may not get as excessive a credit score restrict as you want
Identical to every other bank card, a 0 p.c intro APR card will include a credit score restrict that’s based mostly in your creditworthiness. You gained’t know what credit score restrict you’re authorized for till you get your bank card.
So, what occurs if in case you have $15,000 price of debt you’re planning on transferring to your new bank card, however the issuer solely offers you a $10,000 credit score restrict?
Sadly, you merely gained’t be capable to switch your whole debt to your new card — at the very least not straight away. You’ll need to pay down your debt on each playing cards till you might have sufficient of a credit score restrict left to switch the remainder of your steadiness over to the brand new card, which at that time may not be worthwhile given the size of your introductory interval or the dimensions of your steadiness switch price.
For those who’re going to use for a 0 p.c APR bank card with the intention of paying down debt, search for steadiness switch playing cards with lengthy intro durations and do your greatest to tighten up your credit score rating earlier than you apply. You must also be sure to have a backup debt payoff plan for the remainder of the debt you may not be capable to switch.
The identical idea applies to any giant buy you’re considering of creating. In case your restrict isn’t excessive sufficient, you gained’t be capable to make the acquisition.
6. The 0% APR supply gained’t final perpetually
Bank cards that provide a 0 p.c intro APR every have their very own distinctive perks and advantages. Some include intro APR gives that final lots longer than others, with gives usually starting from 12 to 21 months.
Because you gained’t get a 0 p.c intro APR perpetually, you must plan forward. Your greatest guess is to pay down your money owed (or most of your money owed) whereas curiosity isn’t accruing through the intro APR interval. As soon as your 0 p.c intro APR supply ends, your remaining balances will start accruing curiosity at the usual variable rate of interest.
7. Some 0% APR playing cards allow you to earn rewards
Lastly, you must know that some playing cards with a 0 p.c intro APR allow you to rack up money again or versatile rewards for every greenback you spend. Whereas these gives will be attractive, you must assume lengthy and laborious about how spending extra to earn rewards would possibly affect your debt payoff plans.
For those who’re steadiness switch bank cards for the only objective of getting out of debt, you must most likely keep away from playing cards that allow you to earn rewards, which could tempt you to start out making purchases on the cardboard throughout your intro APR interval. Keep in mind, you gained’t earn rewards on that transferred steadiness anyway.
For those who simply desire a 0 p.c intro APR on purchases for a restricted time, alternatively, incomes some rewards in your spending may not damage so long as you’re not inclined to overspend.
The underside line
Bank cards that include intro APR gives will be numerous, so be sure to discover the greatest 0 p.c APR bank cards earlier than you determine. You might have considered trying a card with a 0 p.c intro APR on purchases, otherwise you may be higher off with one that gives that covers solely steadiness transfers. Be sure to examine your whole choices based mostly on the size of their introductory gives, the charges they cost and the cardholder perks you need.
