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How To Use 0% APR Deals to Your Advantage

Lindsay Mott  |  February 11, 2020

A 0% APR card offer can be a good way to buy something on credit interest-free — as long as you pay by the rules.

Got a big purchase on your radar (hello, refrigerator!) or some small necessities that you won’t be able to pay off all at once? A credit card with a 0% APR offer or a 0% deferred-interest deal can be really enticing. Handled carefully, these promotional offers can help you save some serious money. But one wrong move and you could find yourself in a financial bind.

We asked credit card experts to explain the ins and outs of 0% interest card deals. Here’s what you need to know to come out ahead. 

1. Know which type of offer you’re dealing with

Take your time and read all the details. “People make bad financial choices when they’re rushed and that’s what happens a lot of time with these deals,” says Matt Schulz, chief industry analyst at CompareCards.com.

There are two main types of 0% APR offers: 

0% deferred interest offer: These offers are often found with retail credit cards — e.g. at a home improvement store — and pitched as “special financing” deals or “no interest if paid in full” promotions. You spend a minimum amount to qualify for the special offer and for a specified amount of time (6, 12, 18 months) you pay no interest on that amount. 

With a deferred-interest offer, if you fail to pay off the entire purchase amount within the stated period you will be charged the interest you would have accrued from the date of your purchase, Schulz says. 

0% introductory APR on all purchases offer: With this type of promotion — mostly seen on general-purpose credit cards — you open a new credit card and all purchases made within an introductory period (typically 12 to 18 months) are not subject to interest. If you still have a balance on the card after the introductory period, you’ll pay interest on just that amount moving forward.

But, Schulz warns, it’s important to be absolutely sure that you won’t be charged retroactive interest. Be sure you have a firm idea of how long the introductory period is and whether you will owe interest on the whole purchase or just the remaining balance when it is over. “The last thing you want to have happen is getting hit with an unexpected bill when you thought you were not going to have any,” he says. 

Bill Hardekopf, CEO of LowCards.com, says another thing to consider before signing up for an introductory APR credit card is the post-promotion interest rate. If the interest rate after the fact is higher than another card you already have, this may end up costing you more money in the long run if you typically carry a balance, and it may not be worth it. You have to look at the numbers and decide.

2. Don’t use this as an excuse for bad credit behavior

Say it with me now. Write this on your mirror. Put it on your phone. Tattoo it on your forehead. This is very important to you and your credit score: Do not be late on a credit card payment for either type of offer above. 

“Ideally, during that promotional period, make all your payments on time and only buy the things you can afford to pay off during that intro period,” says Hardekopf. He warns that these offers should not be a reason to go wild, buying all the things that will cause you to have a minimum payment you can’t afford each month.  

Being late or missing a payment altogether have particularly brutal consequences when it comes these 0% interest offers: Both flubs will typically cause the 0% deal to be revoked early, and your balance may be subject to a penalty APR (double digit interest rates) and buy you a hefty late-payment penalty fee.

3. Pay off your balance in full and on time

The way to beat the system, so to speak, is to have a zero balance when the introductory period is over. “Special financing deals can be really good if you know that you’ll be able to pay the balance off in full during that period,” says Schulz. 

If you want to reap the full rewards of a 0% APR financing offer, it’s important not to spend more than you know you’ll be able to pay off in the promotional timeframe. 

If you aren’t able to pay off the balance for whatever reason, it’s important to keep in mind the specifics of the offer — whether interest is deferred and what the post-promotion rate will be — and plan accordingly. 

The bottom line 

With careful management, 0% offers can give you some extra purchasing power when you need it most. “Zero percent APR cards where you truly don’t have to pay interest for that introductory time period are a wonderful opportunity to save money,” Hardekopf says. “They can be advantageous to the consumer if they’re used properly, but can be hurtful, too, if they’re not.” 

Just take your time to know what you are getting into on the front end, be diligent about making all your payments on time, don’t go overboard on the total, and aim to have a zero-dollar balance by the time the promotional period ends.

COMPARE: Personal loan offers for debt consolidation from our partner Fiona.


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