How do 0 percent credit cards work? (2024)

FAQs

How does 0% work on a credit card? ›

0% credit cards can let you borrow without paying interest

This usually relies on you using your card for its intended purpose (e.g. card purchases or balance transfers) and paying off your balance before your offer ends.

A 0% APR is not good for your credit if you overspend, as high credit utilization and missed payments hurt your credit score. If you end up carrying a balance from month to month after the 0% period ends, you will also owe expensive interest charges, making it hard to pay your bills on time and build credit.

If the borrowed money has a 0 percent APR, no interest will be charged on that money for a fixed period of time. Zero interest credit cards, or 0 percent intro APR credit cards, allow cardholders to make payments with no interest on purchases, balance transfers or both for a set period of time.

1. You'll still have a monthly minimum payment. First off, you should know that intro APR credit cards still require you to make a minimum payment each month. This payment won't include any interest for balances that qualify for the 0 percent intro APR offer, but it's due just the same.

While a 0% utilization is certainly better than having a high CUR, it's not as good as something in the single digits. Depending on the scoring model used, some experts recommend aiming to keep your credit utilization rate at 10% (or below) as a healthy goal to get the best credit score.

The minimum payment on a 0% APR credit card is usually either a fixed amount or 1% of your statement balance, whichever is greater. Just note that minimum payment is calculated differently by each issuer.

Zero-interest loans, where only the principal balance must be repaid, often lure buyers into impulsively buying cars, appliances, and other luxury goods. These loans saddle borrowers with rigid monthly payment schedules and lock them into hard deadlines by which the entire balance must be repaid.

There isn't necessarily a catch to 0% APR financing offers. These deals are real, and you won't pay any interest on your car loan. However, that doesn't mean they're the best deal for you. Even without interest payments, you could still pay more overall.

Lenders want to ensure you have a near-perfect history of making payments and handling your debt before offering you no-interest financing. An excellent credit score — 781 or higher — will get you the best deal on financing, but you can still qualify for a competitive interest rate if your score is 670 or higher.

How do I pay off my zero interest credit card? ›

If you're making purchases on a card that only offers a 0 percent offer on balance transfers, you're technically carrying a balance and your purchases likely won't enjoy grace period. To avoid paying interest on purchases, you must pay off your statement balance, including the amount you transferred, by the due date.

A credit card purchase rate of 0% is an introductory offer and will last for a fixed period, usually a few months. After this period, your lender will start to charge interest on purchases.

A 0% intro APR is a promotional interest rate typically offered to new credit card customers. It can apply to regular purchases, balance transfers or both. Once the introductory period ends, the variable APR for purchases and balance transfers applies to any unpaid balance.

on your credit – which can lead to a dip in your score. Plus, once your card's 0% APR promotional period ends, the regular interest rate will kick in. And if you're carrying a balance once the interest-free period ends, you'll owe interest on the remaining debt which, if unpaid, can negatively affect your credit score.

Carrying a balance does not help your credit score, so it's always best to pay your balance in full each month. The impact of not paying in full each month depends on how large of a balance you're carrying compared to your credit limit.

When you choose to use The Zero Card, your health plan pays 100% of the charges. That means no deductible, no co-pay and no co-insurance coming out of your pocket.

Zero-cost credit card processing automatically adds a surcharge to the transactions. Most states within the US have a 4% surcharge limit on each transaction. So for example, if a customer pays for a $10 drink the merchant would tack on an additional $0.40 so the total charge to the customer would be $10.40.

What is a balance transfer card? With a 0% balance transfer you get a new card to pay off debt on old credit and store cards, so you owe it instead, but at 0% interest. A card will have a 0% period, during which you pay no interest – for example, 28 months – and sometimes you'll pay a small fee.