It's extremely unlikely that your credit card issuer will extend an intro APR period, so you might have to switch to other cards if you want to keep that low rate.
Once the introductory period expires, you have to pay interest on any remaining debts at the standard APR on the card. And as standard credit card APRs are usually at least 20%, that could prove expensive – especially if you can't clear the debt quickly.
Once the 0% or reduced-interest period is over, consider the: Interest rate you'll be charged on the balance. Interest rate you'll be charged on any future purchases. Annual fee or any other fees.
A 0 percent APR credit card can be a great financial tool, but there are debt traps to be aware of when using one. Always make the minimum payments on your credit card to avoid consequences like late fees, damaged credit and penalty APRs.
When your intro APR ends, your credit card's regular APR will kick in on any remaining and new balances. Knowing when your promotional period ends helps you pay off your balance beforehand and keeps you from being surprised by mounting interest on a residual balance.
Cons of a 0% APR Car Loan
Only borrowers with outstanding credit qualify. Availability is limited to specific models and trim levels. Shorter loan terms mean higher monthly payments.
The introductory APR offer won't last forever
It is important to remember that 0 percent intro APR offers typically expire 12 to 21 months after opening the card. That provides a limited window of time in which to benefit, but it can also provide a false sense of security.
As long as you meet the minimum monthly payments, it's possible to stretch your credit card payments over a longer timeframe than your agreed interest free period. However, once your introductory 0% purchase rate expires you will be charged interest on these payments.
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).
For a set period (for example, five years), you pay nothing off the amount borrowed, so it doesn't reduce. At the end of the interest-only period, the loan will change to a 'principal and interest' loan. You'll start repaying the amount borrowed, as well as interest on that amount.
Yes, you should make a plan to pay off a zero-interest credit card prior to the end of the promotional APR period. Failing to do so means you'll face interest charges on your remaining balance.
Your 0% APR deal could be canceled
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.
Once that time period ends for your balance transfer credit card, the card's ongoing APR will apply to your remaining credit card balance. The higher the credit card balance is when the 0 percent APR period ends, the more interest you will accrue.
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.
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.
There are some differences around how the various data elements on a credit report factor into the score calculations. Although credit scoring models vary, generally, credit scores from 660 to 724 are considered good; 725 to 759 are considered very good; and 760 and up are considered excellent.
Even if you still have an unpaid balance when the promotional period is over, you will start to pay interest on that remaining balance only from the date the promotional period ends.
You'd save money on interest
If you paid $200 per month on such a card, you could become debt-free in 20 months with $0 in interest paid.
If a credit card offers 0% interest on money transfers, it means you can transfer money from your credit card to your current account, and you won't be charged interest on the amount transferred, as long as you make the minimum monthly repayments.
While balance transfers often come with promotional 0% APR offers for a limited time, interest begins to accrue on new purchases immediately if the balance isn't fully paid off by the end of the promotional period.
0% intro APR cards require good to excellent credit
This means you'll need a FICO credit score of at least 670 or a VantageScore credit score of at least 661. If you have very good or excellent credit, which means a FICO score of at least 740 or a VantageScore of at least 781, your chances of approval are even higher.
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.
If you have a low-interest loan or 0% financing, there is little to no benefit to an early payoff. The same is true if you're close to the end of the loan. If you don't have an emergency fund, use your extra cash to start one before you pay off your car loan.