Key takeaways
- Cards that offer a 0 percent intro APR card can be helpful for consolidating and paying off higher-interest debt, as long as you use the card responsibly.
- You’ll need to prioritize paying off what you transfer within your intro period, however. After it expires, a much higher rate applies to any balance.
- Compare 0 percent intro APR credit cards for a fit with your repayment timeline, credit score and overall financial goals.
- And factor in the fee of 3 percent or higher you’ll pay for each transfer.
This piece was last updated on Jan. 2, 2024, to reflect current credit card details.
Preparing for a major purchase? You could pursue short-term financing in the form of a personal loan, home equity loan or home equity line of credit. But if you can afford to pay off what you borrow in full within a year or so, a 0 percent APR credit card could be a better option. This type of card can save a lot of money you would otherwise spend on interest charges.
Learn more about how this type of credit card works —and how you might be able to use one as an interest-free loan on large purchases.
How a 0% intro credit card works
A balance transfer credit card allows you to transfer high-interest debt from other cards to a new one offering no interest for a specific period of time. Many of these types of cards also offer a no-interest period on purchases. The introductory 0 percent APR period you’re offered typically ranges from six to 21 months, depending on the card. After your intro period expires, the interest rate increases to the standard (typically variable) rate for your remaining balance due and any future purchases.
“The interest rate from there will depend on your credit,” says Laura Sterling, VP of marketing at Georgia’s Own Credit Union. “In many instances, cards that offer 0 percent interest during the introductory period charge a higher standard rate than those without introductory offers, although that is not always the case.”
Because balance transfer cards come with different features, you’ll want to compare these benefits against your needs before signing up. Also note any fees — such as annual fees and balance transfer fees — that can influence the overall cost of using the card.
How to use a 0% APR card as an interest-free loan
It’s possible to use a balance transfer card as an interest-free loan on high-dollar purchases. Simply look for a card that offers 0 percent interest on purchases, as well as balances you transfer. Then prioritize paying off your purchases before the promotional period ends.
Let’s say you’re in the market for a new refrigerator. If you used a new 0% interest card for that purchase, you’d be able to pay down the purchase with no additional interest for up to 21 months, depending on your card. To reach that goal, you’d need to divide the purchase price by the number of months in your promotional period.
Here’s an example of what you might need to pay for an interest-free loan, depending on a range of typical promotional periods.
| Purchase price | Promotional period | Monthly payment |
|---|---|---|
| $2,000 | 10 months | $200 a month |
| $2,000 | 18 months | $112 a month |
| $2,000 | 21 months | $95.25 a month |
You typically need good credit to qualify for a 0 percent credit card.
“A good candidate is someone with a strong credit score — typically 670 or higher — a reliable income and the discipline to pay off the balance before the 0 percent APR period ends,” says Andrew Latham, a certified financial planner.
Pros and cons of a 0% credit card
A 0 percent APR credit card offers numerous perks and also potential drawbacks when used as an interest-free loan.
“For one, it allows you to make significant purchases or balance transfers without accruing any interest during the promotional period,” says Latham. “This can effectively provide an interest-free loan for a major purchase or a period of respite to pay down existing high-interest debt.”
Switching from a card with a higher interest rate to a 0 percent intro APR card can save you on interest while also reducing your required minimum payment.
And because every dollar goes toward reducing your principal balance, consolidating debt with a balance transfer credit card at zero interest can help you pay off your debt more quickly than with a traditional card.
And yet, it’s not free money.
“It’s easy to forget that the 0 percent APR period will end. You can hit that deadline and be surprised that your balance is suddenly higher than it was beforehand,” cautions Joe Camberato of National Business Capital. “Some 0 percent APR credit cards also charge higher interest rates after the intro period ends compared to standard credit cards, too.”
When to pay for a purchase with a 0% credit card
If you want to consolidate and pay off high-interest debt from existing credit cards you have, or if you need to borrow money for a major purchase that you plan to repay within a few months, you’re likely a good prospect for a 0 percent credit card.
Here are three examples where applying for and using a 0 percent APR credit card versus a short-term loan can be worthwhile.
- An urgent home improvement. Let’s say you need to replace an old washer and dryer. You apply for a 0 percent APR credit card with an interest-free intro APR of 18 months, and you put $3,600 on your $5,000-limit card to pay for the new appliances and installation. If you pay at least $200 each month on your card for 18 months, you’ll pay off your new washer and dryer without paying any interest.
- A new home office. Imagine you want to convert an empty bedroom into a work-from-home space on the cheap, but you need to repaint and purchase a new desk and new computer that costs $3,000 total. If you were to charge the $3,000 on a 0 percent APR credit card with a 12-month promotional period, you could pay $250 monthly for 12 months and fully pay off the purchases.
- A business startup. Let’s say you’re an entrepreneur planning to launch a landscape contracting company, and you need to invest $6,000 into the purchase of two riding mowers. If you qualified for a 0 percent APR credit card offering no interest on new purchases for 18 months, you’d pay only $334 a month to pay it off without interest. “This can enable you to purchase the equipment you need and use your profits to pay off the balance instead of leveraging your personal funds,” Camberato says.
How to choose the right 0% APR offer
Before applying for a 0 percent intro APR credit card, consider the following key features:
- Length of the intro offer. The most critical factor when choosing a 0 percent APR credit card is the duration of its introductory period. While cards often offer zero interest for at least 15 months, some cards offer up to 21 months without interest. This period determines how long you can avoid paying interest before the regular APR kicks in.
- Qualified transfers or purchases. Some 0 percent intro APR credit cards offer no interest on purchases only, balance transfers only or both. And the intro periods can differ between purchases and balance transfers. For instance, you might enjoy a 0 percent intro APR on purchases for 12 months and a 0 percent intro APR on balance transfers for 18 months. If your card only offers a promotional rate on balance transfers, it’s not a good candidate for large interest-free purchases.
- Lower rates and fees. Look for a card that offers a low everyday interest after your promotional period ends. Low or no annual fee is also ideal.
- Perks and rewards. Think about the long-term value of the card you’re interested in. Do rewards align with your spending habits? If you spend a lot at the supermarket, a top grocery store rewards card offering a 0 percent APR period can earn you rewards into the future.
0% intro APR cards you can use as a short-term loan
Here are four 0 percent APR credit cards worth considering as alternatives to a short-term loan.
The Wells Fargo Reflect® Card offers a 0 percent introductory APR for a remarkable 21 months on new purchases and balance transfers made within 120 days of account opening. After that, an 18.24 percent, 24.74 percent or 29.99 percent variable APR applies. (A balance transfer fee that’s the greater of 5 percent or $5 also applies.) A notable perk is cellphone protection against damage or theft. Claims cover up to $600 and are limited to two claims a year (subject to a $25 deductible). Drawbacks are a 3 percent foreign currency conversion fee on international purchases and no rewards program, limiting its long-term value.
The BankAmericard® credit card* offers a 0 percent intro APR for 18 billing cycles on purchases and balance transfers made within the first 60 days of account opening, making it one of the top cards to help you pay off debt or cover a sizable emergency purchase. After, a variable APR of 16.24 percent to 26.24 percent applies. (A 3 percent fee also applies to balance transfers in the first 60 days, 4 percent thereafter.)There’s no penalty APR, which is peace of mind should you miss a payment’s due date. But there are no rewards or other features to help give it long-term value.
The Discover it® Cash Back offers 0 percent intro APR for 15 months on both purchases and balance transfers, after which a variable APR of 18.24 percent to 28.24 percent applies. Balance transfer fees can also get expensive, with an intro balance transfer fee of 3 percent and up to 5 percent on future balance transfers (see terms).Setting this popular card apart is a rewarding cash back program. You can earn 5 percent cash back on rotating categories each quarter (on up to $1,500 in purchases, then 1 percent back, with activation required) and 1 percent cash back on all other purchases.Other perks include no annual fees, foreign transaction fees or penalty APRs that come with all Discover cards. And Discover will automatically match all the cash back you’ve earned at the end of your first year.
With the Capital One SavorOne Cash Rewards Credit Card, you get a 0 percent intro APR on purchases and balance transfers for 15 months from account opening, followed by a variable APR of 19.99 percent to 29.99 percent. (A 3 percent balance transfer fee applies on amounts transferred within the first 15 months or 4 percent at a promotional APR that Capital One may offer you at any other time.)The card’s generous rewards program offers a whopping 10 percent cash back on purchases made through Uber and Uber Eats (through Nov. 14, 2024), 8 percent cash back on Capital One Entertainment purchases and 5 percent cash back on hotels and rental cars booked through Capital One Travel. You also get 3 percent cash back on dining, entertainment, popular streaming subscriptions and grocery store purchases (excluding superstores like Walmart and Target), and 1 percent cash back on all other purchases. Your rewards never expire, and there’s no minimum amount required for redemption.All of this with no annual fee and no foreign transaction fees. Note that the SavorOne card tends to have a higher ongoing variable APR compared to other rewards cards, which means you’ll want to prioritize paying off balances you take on during the intro period before the intro period ends.
The bottom line
You’ll find plenty of solid 0 percent APR credit cards on the market for use as an interest-free loan. But make sure to budget paying off your balance in full within the promotional period.
*Issuer-required disclosure statement
Information about the BankAmericard® credit card has been collected independently by Bankrate. Card details have not been reviewed or approved by the card issuer.
Information about the BankAmericard® credit card was last updated on February 9th, 2024.
