How to use a 0% APR credit card as an interest-free loan
Editor's Note
If you're getting ready to finance a big purchase, there are a number of options that can help, including personal loans, home equity loans and home equity lines of credit.
But if you have the means to repay the borrowed amount in full within a few months, your best option could be to use a credit card with a 0% annual percentage rate (APR), which can save you a big chunk of money you would otherwise spend on interest.
Keep reading to learn more about how 0% APR cards work and how you could use one to finance your next big buy.
How 0% APR cards work
A 0% APR credit card does not require you to pay interest on your credit card balance for a specified period. This introductory phase typically lasts between six and 21 months, but once it ends, the interest rate will revert to the standard rate, which is often variable, for any remaining balance and future purchases.
Note that these 0% interest cards differ in the benefits and features they offer, with some providing longer introductory periods and various benefits. Annual fees and balance transfer fees can also affect the amount you'll pay when it's all said and done, so you'll want to consider all the above factors when choosing a low-APR card.
0% APR cards: Pros and cons
A 0% APR card can help you save money on interest charges and reduce your monthly credit card payment. Many people also use zero-interest balance transfer credit cards to consolidate debt. They allow you to pay off your debt faster since, with no interest charged, every payment goes directly to the principal balance.
Using any credit card responsibly — including cards with a 0% introductory APR — will help boost your credit score. Paying down debt reduces your credit utilization ratio, which, along with timely payments, is vital for a healthy FICO credit score.
Many 0% APR cards also offer rewards in the form of points or cash back, along with welcome bonuses and limited-time incentives. These cards may also offer perks like cellphone insurance, purchase protection and extended warranties.
These kinds of credit cards do come with some drawbacks, though. Some 0% APR cards may charge a balance transfer fee, typically ranging from 2% to 5% of the transferred amount, when you transfer debt from other issuers.
Additionally, applying for a new credit card can result in a temporary decrease in your credit score due to a hard inquiry, although this impact is generally minor and short-lived.
Lastly, most 0% interest cards don't come with the best rewards, so if you're looking for valuable perks and earnings rates, you'll be better off elsewhere.
Related: 6 things to do to improve your credit score
When should you use a 0% APR card?
Whether you're looking to lower your credit card interest rate or need short-term financing for a major purchase, a 0% APR credit card could be a great choice for you.
In fact, there are a few scenarios where it may be more advantageous than taking out a short-term loan:
- Urgent home improvements: Suppose you need a bathroom renovation or have to replace a washer and a dryer. A 0% APR credit card with an extended introductory APR period would allow you to charge the purchase to the card and pay it off over several months with no interest or fees.
- Setting up a new home office: If you wanted to transform an empty bedroom into a work-from-home space, you could buy what you need — a new desk, a second computer screen, etc. — and work to pay off your new setup over time.
- Startup business expenses: Starting a business is rarely cheap, but several 0% APR credit cards for small businesses have extended introductory periods that can help you get your new venture up and running without falling behind the eight-ball with big purchases.
Related: How to manage debt with a balance transfer credit card
Choosing the right 0% APR offer
For most people, the most important factor when selecting a 0% APR credit card will be the length of the 0% interest period. These typically range from 15 to 21 months but can vary from card to card.
You'll also want to read the offer details. Some 0% introductory APR credit cards cover purchases, balance transfers or both, and different timelines may apply for zero-interest purchases and balance transfers.
For example, you might receive 0% APR on purchases for 12 months and on balance transfers for 18 months.
You should always consider the additional perks and rewards offered by a 0% APR credit card. Some offer cash back, points or other incentives, while others offer travel perks and benefits you can use on your next trip.
Finally, if earning rewards isn't a priority, look for a card with a lower standard interest rate for when the 0% APR period ends, along with no annual or balance transfer fees.
Related: Should you carry a balance on zero APR cards?
Bottom line
It's important to be mindful when choosing (and using) a 0% APR credit card. If you fail to pay off your balance before the introductory period ends, you could end up with unexpected charges, defeating the entire purpose of acquiring a low-interest card.
Be sure to explore the options that best suit your repayment timeline and financial restrictions. For example, if you don't qualify for a 0% APR credit card, a personal loan may be a viable alternative, as they often have more lenient eligibility requirements. Just be careful that you're not paying an excessive APR.
If you think a low-interest card is the right choice, check out our list of the best 0% introductory APR credit cards.
TPG featured card
Rewards
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Intro offer
Annual Fee
Recommended Credit
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.
Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Intro Offer
You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
Credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.Excellent to Good
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.