What Does 0% Intro APR Mean on a Credit Card and How Does it Work?

Some cards offer a 0% intro APR on purchases, balance transfers or both. That means you won’t be charged interest on those types of transactions until the intro period ends. Let’s look at how it works.

What is a credit card introductory APR?

An APR, or Annual Percentage Rate, is the yearly interest rate charged on a credit card. Some credit cards offer an introductory period during which the APR is lower than the standard purchase APR. In fact, it’s not unusual for this introductory APR to be 0%.

How does 0% intro APR work?

You might have received offers for a 0% intro APR credit card in the mail and wondered how you could have a credit card with no interest. A 0% intro APR credit card offer allows for an introductory period, usually over a set number of months, that starts as soon as the account is open and charges no interest on purchases, balance transfers or both until that period ends.

Benefits of 0% intro APR

A 0% intro APR on purchases can be helpful if you're planning a major purchase and can pay it off before the introductory period ends. A 0% APR offer on balance transfers can help you get a handle on credit card debt. Remember that you typically can’t transfer balances between cards from the same bank. So, for example, you cannot transfer a balance from one Citi card to another Citi card.

During the introductory period, you still must make at least on-time minimum payments. If you don’t make on-time payments, the credit card issuer may cancel the 0% intro APR and apply a penalty APR, which can be the highest APR on your card.

The 0% intro APR may not apply to all transactions

Not every activity on your credit card is categorized the same way. It’s possible to have different interest rates on the same credit card. Here's how the 0% intro APR offer may work for different kinds of transactions:

Purchase APR

Purchase APR is the interest rate for purchases made on the card. A 0% intro APR may apply to new purchases.

Balance transfer APR

Balance transfer APR is the interest rate for debts moved to your credit card account from another credit card with another lender. Balance transfers must be approved by the card issuer and often come with a balance transfer fee – typically a flat fee or a percentage, whichever is greater. Even with a balance transfer fee, the introductory period can give you a substantial window to strategically pay down the balance transfer without accruing interest.

Keep in mind, even if you have a 0% intro APR on balance transfers, you may be charged interest on purchases made with the credit card unless you also have a 0% APR on purchases or you pay the entire statement balance, including the balance transfer amount, by the payment due date each billing period. Check your card’s terms for more information. If this is true for your credit card, you may want to avoid using it to make purchases during the intro period and focus on paying down the balance transfer.

Cash advance APR

Cash advances are not covered under a typical introductory APR offer. With a cash advance, you will likely begin accruing interest from the date the transaction posts to your account, and the interest rate is often higher than even the standard purchase rate.

Penalty APR

An introductory APR doesn’t protect you against a penalty APR. If you fail to make a minimum payment on time, the credit card issuer might end the introductory APR and instead charge a high penalty APR in its place.

Keep an eye how long the 0% intro APR lasts

Let’s look at some ways to make the most out of your 0% intro APR period.

If you plan to do a balance transfer, think strategically about how you will use the time when the 0% APR applies. How will you focus on paying down your debt?

If you have a 0% intro APR on purchases and want to use the card for shopping or making a large purchase, make sure the balance is fully paid off before the introductory period ends and the standard purchase rate begins, or that balance will begin to accrue interest.

How long does the 0% intro period last?

The length can vary depending on the issuer, card and type of APR (balance transfer or purchase). You’ll often find intro periods lasting between 12 and 21 months. If you’re not sure about your own intro offers, check your card’s terms and the amount of time you have remaining in your intro period.

A 0% intro APR credit card can impact your credit score

Your credit score can still be impacted by purchases or balance transfers made during a 0% intro APR period. This is because any balance you carry on a credit card can increase your credit utilization ratio, which will affect your creditworthiness, regardless of whether you’re accruing interest.

However, paying down your debt after new purchases or a balance transfer can be good for your credit utilization ratio. What's more, opening a new credit card account can increase your total available credit.

Know what it takes to qualify for a 0% intro APR offer

To qualify for a 0% intro APR offer, it's best to have excellent credit and a good payment history.

If you want to transfer a balance or make a large purchase with a 0% intro APR offer, your creditworthiness can help determine the credit limit on your new card, which determines the amount that can be transferred and the amount you can spend.

Deferred interest offers vs. 0% intro APR credit cards

With both deferred interest and 0% intro APR offers, you’re not charged interest if you pay off the entire balance before the introductory period expires. The difference is what happens when you don't.

A 0% intro APR credit card will only start to accrue interest on the remaining balance once your introductory period ends. A deferred interest offer, on the other hand, charges interest that accumulated on the entire balance during the introductory period. You’ll start being charged interest on the remaining balance after that period.

For example, if you charged $2,500 during an introductory period and paid $1,000 before that period ended, a 0% intro APR credit card would only start charging interest on the remaining $1,500. A deferred interest offer would instead charge interest on the $2,500 balance that accrued during the introductory period and begin charging interest on the remaining $1,500.

This is why it’s important to read the fine print on a credit card offer and stay aware of your timelines.

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.

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