A deferred interest plan means that you won't have to pay any interest on the purchase if you pay it off within the specified time frame – in this case, 12 months.
Getting an offer for 0 percent intro APR means no interest will be charged on the money you borrowed for a fixed period of time.
A 0% credit card is a credit card with a 0% introductory/promotional interest rate available for a set duration. This means you can spread costs by paying off less than the full amount each month and still pay no interest. Once the offer ends, the standard rates will apply to the remaining balance of your card.
Credit cards offering introductory 0% APR don't charge interest for a specific time period (typically six months to a year) on purchases, balance transfers, or both. That could mean you can save on interest if you plan to carry a balance during the introductory period or transfer a balance from another card.
Both deferred interest offers and 0% intro APR cards do not charge interest if you pay off the entire balance before the introductory period expires. The difference is what happens when you don't. A 0% intro APR credit card will only start to charge interest on the remaining balance once your introductory period ends.
Costs of an interest-free deal
If you still have money owing after the interest-free period ends, you'll be charged interest. Interest rates can be as high as 26%. Retailers also charge fees on interest-free deals, which may be added to the amount borrowed.
A 0% purchase credit card is designed for making purchases on that will not accumulate interest as long as you are within the 0% interest free period, otherwise known as the introductory period or introductory offer.
Even with a 0% APR card, you'll still have to make monthly minimum payments — usually a small percentage of your balance. And if your payment is late, even by a single day, your card issuer could cancel the 0% offer and reset your card's interest rate to the ongoing APR.
Are interest-free credit cards really interest free? Yes, they are, but only for a set time. Once the 0% period ends, interest kicks in at the standard rate. You start paying this rate on any remaining balance.
Key takeaways. A credit card with an introductory 0 percent APR can help you manage new debt or pay off old balances. However, a 0 percent intro APR card can hurt your credit if it causes you to carry a higher balance than usual or if you carry your balance beyond the introductory offer period.
A 12-month loan is a type of personal loan that must be repaid within 12 months. While personal loans can extend anywhere from 12 to 72 months or more, most lenders will allow borrowers to select the length of the repayment within standard options. Choosing a shorter term can lead to less overall interest.
A 0% APR credit card is a credit card that charges no interest on qualifying purchases, balance transfers or both for a fixed amount of time. This no-interest period is called a promotional period. If the promotional period is based on opening a new account, it may be referred to as an introductory period.
Having 0% financing on a car loan means you pay no interest to the lender on the money borrowed to buy the car. In other words, a 0% APR car loan is an opportunity to pay the same amount of money as a cash buyer, even though you're spreading your payments over a longer term.
Alternatively, you can use the simple interest formula I=Prn if you have the interest rate per month. If you had a monthly rate of 5% and you'd like to calculate the interest for one year, your total interest would be $10,000 × 0.05 × 12 = $6,000.
Don't rack up debt you can't afford
But if you don't pay off your balance in full before the zero-interest period ends, your credit card debt will begin to accrue interest — making it even harder to pay off your balance in the future.
A 0% APR credit card offers no interest for a period of time, typically six to 21 months. During the introductory no interest period, you won't incur interest on new purchases, balance transfers or both (it all depends on the card).
Pay off your balance on time and in full; this means the total amount on the due date (to avoid purchase APR, late payment APR/fees). If you can't pay off your balance in full, at least pay the minimum payment (the lowest amount required by your card issuer in order to not consider it a late payment).
It's a good idea to pay off your credit card balance in full whenever you're able. Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.
Cardholders are typically given at least 12 months without interest, and some cards offer as long as 21 months. Create a payment plan for yourself immediately after you open the card and make the purchase. Keep in mind: The minimum payment must be met each month.
A 0% credit card allows you to pay off your debts or spread the cost of purchases – or occasionally both – interest free. But the interest-free period doesn't last forever. Once it's over, you start paying the card's standard interest rate.
You must be careful to avoid getting wrapped up in the thrill of 0% deals. Although the interest costs are listed as zero, the true numbers are built into the price of the loan. Unless you're aware of this before signing on the dotted line, you may be signing into a less than stellar deal.
Credit cards with 0% interest on purchases can be a good way to spread cost and build up your credit score. For example, you could use one to book flights, pay for a holiday or cover the cost of home improvements and then pay it back in monthly repayments.
NerdWallet's annual analysis of household debt finds that revolving credit card debt is up just 1.5% compared to 2023. On average, a household with revolving credit card debt owes $10,563. [1] Mortgage, auto loan, student loan and overall total household debt have also all increased slightly from last year.