These are the pros and cons of 0% APR credit cards

With so many various bank card perks and introductory affords accessible, you might marvel, “Is a 0% annual share charge good?”

It is an incredible query. As with most issues, there are professionals and cons to 0% APR bank cards.

Here is what you could know that will help you resolve if a 0% APR bank card is an effective addition to your pockets.

Associated: Are you paying enough attention to your credit card’s APR?

Repay giant purchases with out curiosity

If you’ve gotten a big buy developing that you simply will not be capable of repay instantly, a 0% APR bank card can provide you some further time to repay the acquisition with out accruing any curiosity.

Earlier than inserting a big buy on a 0% APR card, guarantee you’ve gotten a plan to pay it off. Blindly charging purchases to a 0% APR card could appear acceptable within the quick time period. Nonetheless, for those who can’t repay the cost earlier than the introductory APR interval ends, you may begin accruing important curiosity.

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Pay down an present stability with out accruing curiosity

In case you’re carrying a stability on one other bank card, you could possibly switch that stability to your 0% APR bank card. Then, you may work on paying down the stability with out accruing any extra curiosity.

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Enhance your credit score rating

Paying down debt might help increase your rating because it lowers your credit utilization ratio, and making on-time funds in your card is an important issue used to determine your FICO credit score.

Earn rewards

Some no-interest bank cards provide further rewards packages, corresponding to money again or rewards factors, which may result in extra financial savings. This could embody a welcome provide and money again or rewards factors based mostly on every greenback you spend.

For instance, the no-annual-fee Chase Freedom Unlimited® (see rates and fees) earns you a minimum of 1.5% money again on all purchases whereas providing a beneficiant introductory APR interval.

With Chase Freedom Limitless, your 0% introductory APR interval will final for 15 months on purchases and stability transfers. After that, a variable APR of 18.99% to twenty-eight.49% will apply. To be taught extra, take a look at our full review of the Chase Freedom Unlimited.

Associated: Why the Chase Freedom Unlimited should be the first card in every student’s wallet

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Steadiness switch charges

If you wish to switch your stability from one other card to your 0% APR bank card, you may be charged a balance transfer fee. It is normally 3% to five% — doubtless a lot decrease than the APR you are already paying, for the reason that present average credit card APR is over 20%. Nonetheless, you must think about that payment if contemplating a stability switch to repay your bank card debt.

Strict phrases and circumstances

Remember to learn your card’s phrases and circumstances. As an illustration, some playing cards solely apply the 0% APR provide to new purchases and do not prolong it to stability transfers. Additionally, most of them will lower your 0% APR interval quick if in case you have a late fee. Know the phrases of your provide to keep away from any disagreeable surprises.

Make sure you confirm whether or not the cardboard you are inquisitive about affords a real 0% introductory APR provide or a deferred interest provide. With deferred curiosity, your bank card will nonetheless accrue curiosity through the deferred curiosity interval. You’ll solely be chargeable for paying that curiosity for those who do not repay the complete cost inside a sure time-frame. Deferred curiosity is often seen on store cards.

False sense of safety

Whereas paying off balances in full every month is right, 0% APR playing cards is usually a useful gizmo for managing giant purchases or debt if used responsibly.

Having stated that, no quantity of bank card rewards will be capable of offset the curiosity you may accrue for those who’re overspending in your bank cards. If a interval of not accruing curiosity will tempt you to spend greater than what you may repay, a 0% APR bank card might do extra hurt than good.

Associated: TPG’s 10 commandments of credit card rewards

Is 0% APR price it?

Whether or not 0% APR is price it is dependent upon your monetary objectives and habits. In case you can repay or considerably pay down your bank card stability through the 0% APR interval, getting a bank card with this provide can prevent some critical cash and hold you from paying undesirable curiosity.

Nonetheless, if not accruing curiosity will tempt you to spend greater than you may pay in your bank card, it undoubtedly will not be price it in the long run.

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