If something sounds too good to be true — like 0% interest on a credit card — then it’s smart to ask questions. While a credit card advertising a 0% APR generally does not charge interest on qualifying purchases or balance transfers for a period of time, there is a lot of fine print you’ll want to be aware of. Here are four key things to know before you apply or start swiping.
1. The no-interest period is only temporary
The 0% interest “only lasts for the duration of the introductory period, and once it ends, the card will revert to its regular APR (the exact rate is determined based on your creditworthiness),” said NerdWallet. Exactly how long this period lasts can vary widely from card to card. Some may offer 0% APR for just 12 months, and others for as long as 21 months. Regardless, you will want to know exactly when it ends, because standard credit card APRs are usually well into the double digits.
2. The 0% APR may not apply across the board
Be aware that a 0% APR may not apply to everything, since a single credit card can have multiple APRs. While “just about every 0% APR offer is for new purchases made with the card,” known as the purchase APR, only “some of these introductory offers also feature 0% on balance transfers, but not all do,” said NerdWallet. Further, even if the offer is for both types of APRs, the length of the promotional period may not be the same for each of them.
3. You could lose the rate if you do not abide by the rules
When you “miss a payment or make a late payment on a 0% APR credit card, the terms of the offer likely stipulate that the issuer could nullify your promotional offer,” said Bankrate. “This also happens if you don’t make at least your minimum payment each billing cycle.” In some cases, these missteps may result in the penalty APR applying, which is significantly higher than the regular purchase or balance transfer APR.
4. You will owe interest if any balance remains after the promo period
If you are not able to pay off your full balance before the promotional period ends, you could see your credit card balance balloon. This is where it becomes particularly important to pay attention to the fine print. While a standard 0% deal “charges interest only on whatever remaining balance exists after the promotional period ends,” it is also possible to instead end up with a deferred interest offer, which works differently, said The Washington Post. For that, “if you can’t pay by the deadline, you get hit with backdated interest, which can amount to hundreds or thousands of dollars.”