The pros and cons of 0% APR credit cards
Editor's Note
With so many different credit card perks and introductory offers available, you may wonder, “Is a 0% annual percentage rate good?”
It’s a great question. As with most things, there are pros and cons to 0% APR credit cards.
Here’s what you need to know to help you decide if a 0% APR credit card is a good addition to your wallet.
Pros of 0% APR credit cards
A 0% APR credit card gives cardholders an introductory period — usually six to 21 months — during which they won’t accrue interest on their credit card balance. This time period can be extremely helpful if your goal is to pay down credit card debt. After the introductory period ends, cardholders will be given a new APR; this rate will vary depending on the credit card’s terms and the cardholder’s creditworthiness.
Related: Are you paying enough attention to your credit card’s APR?
Pay off large purchases without interest
If you know you have a large purchase coming up that you won’t be able to pay off immediately, a 0% APR credit card can give you some extra time to pay off the purchase without accruing any interest.
Before placing a large purchase on a 0% APR card, ensure you have a plan to pay it off. Blindly charging purchases to a 0% APR card may seem acceptable in the short term. However, if you cannot pay off the charge before the introductory APR period ends, you’ll start accruing significant interest.
Related: What is a good APR for a credit card?
Pay down an existing balance without accruing interest
If you’re carrying a balance on another credit card, you may be able to transfer that balance to your 0% APR credit card. Then, you can work on paying down the balance without accruing any more interest.
Related: The best 0% APR credit cards
Improve your credit score
Paying down debt can help boost your score since it lowers your credit utilization ratio, and making on-time payments on your card is the most important factor used to determine your FICO credit score.
Earn rewards
Some no-interest credit cards offer additional rewards programs, such as cash back or rewards points, which can lead to more savings. This can include a welcome offer and cash back or rewards points based on each dollar you spend.
For example, the no-annual-fee Chase Freedom Unlimited® (see rates and fees) earns you at least 1.5% cash back on all purchases while offering a generous introductory APR period.
With Chase Freedom Unlimited, your 0% introductory APR period will last for 15 months on purchases and balance transfers. After that, a variable APR of 18.49% to 27.99% will apply. To learn more, check out our full review of the Chase Freedom Unlimited.
Related: Why the Chase Freedom Unlimited should be the first card in every student’s wallet
Cons of 0% APR credit cards
Of course, a 0% APR credit card does have some drawbacks.
0% doesn’t last forever
It’s important to remember that the introductory 0% APR period will eventually end. If you haven’t paid your balance in full by the time it is due, you’ll be hit with interest on that balance when the period is over.
Related: What happens when 0% APR ends?
Balance transfer fees
If you want to transfer your balance from another card to your 0% APR credit card, you’ll be charged a balance transfer fee. It’s usually 3% to 5% — likely much lower than the APR you’re already paying, since the current average credit card APR is over 20%. Still, you should factor in that fee if considering a balance transfer to pay off your credit card debt.
Strict terms and conditions
Be sure to read your card’s terms and conditions. For instance, some cards only apply the 0% APR offer to new purchases and don’t extend it to balance transfers. Also, most of them will cut your 0% APR period short if you have a late payment. Know the terms of your offer to avoid any unpleasant surprises.
Ensure you verify whether the card you’re interested in offers a true 0% introductory APR offer or a deferred interest offer. With deferred interest, your credit card will still accrue interest during the deferred interest period. You will only be responsible for paying that interest if you don’t pay off the entire charge within a certain time frame. Deferred interest is commonly seen on store cards.
False sense of security
While paying off balances in full each month is ideal, 0% APR cards can be a useful tool for managing large purchases or debt if used responsibly.
Having said that, no amount of credit card rewards will be able to offset the interest you’ll accrue if you’re overspending on your credit cards. If a period of not accruing interest will tempt you to spend more than what you can pay off, a 0% APR credit card may do more harm than good.
Related: TPG’s 10 commandments of credit card rewards
Is 0% APR worth it?
Whether 0% APR is worth it depends on your financial goals and habits. If you can pay off or significantly pay down your credit card balance during the 0% APR period, getting a credit card with this offer can save you some serious money and keep you from paying unwanted interest.
However, if not accruing interest will tempt you to spend more than you can pay on your credit card, it definitely won’t be worth it in the end.
Related: How to avoid and reduce credit card interest
Bottom line
A 0% APR credit card is a great option for someone who wants to pay off a credit card balance without accruing interest. However, it’s not the perfect solution for everyone. Before applying, consider the card’s terms and your debt payment plan to ensure you’ll benefit from your 0% APR credit card.
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.