Boy, that big "0%" that credit cards offer is so appealing. Just imagine it: Paying nothing—zero, nada, zilch—for buying something. The 0% interest makes us feel richer before we even sign up.
What's that? Something for free? There has to be a catch, right? Well, yes. That's absolutely right. Unless you pay off the minimum amount on your credit card balance every month, you will be paying interest. Also, it will be far higher than 0%, and if you find yourself still paying off the card after the introductory offer is over then expect to be hit with a super high APR.
If you know what APR means, you can save money. Big time!
Annual Percentage Rate, or APR, is one of the most important numbers to understand when selecting a credit card. It is the interest on your credit card balance charged by your issuer. If you are not someone who religiously pays off your balance in full, you incur APR on what you owe until you pay it off.
At the end of each day, the card issuer will multiply your current balance by this daily rate to come up with the daily interest charge. That cost is then added to your balance the next day. For example, if your credit card has an APR of 20%, it will have a daily rate of 0.000547%, which is 20% divided by 365. If you have a balance of $1,000 on day 1 and your APR is 20%, then the next day, your balance will be $1,000.54, plus anything new you put on the card and minus any new credits or payments. So at the end of the month, for example, the balance has grown to $1,016.88 and will continue to "compound" until you pay it off. In just one year, you'd pay about $242 in interest with a 20% APR, assuming you didn't put anything new or pay off the credit card.
That's how credit card companies and issuers get rich.
You need to know that there are two types of APR: variable and fixed. Most credit card issuers only offer variable, where they can lower or raise (more likely) your APR.
Your credit score and report determines the APR you are offered. The first thing an issuer will look at when determining your creditworthiness is your payment history.
- Have you paid your bills late more than twice?
- Have you ever had an account go into default?
- Or worse, have you ever declared bankruptcy?
If you can answer ‘yes' to any of these questions, don't despair. It doesn't necessarily mean that you cannot get a credit card, but it does mean you will most likely not be offered one with a low APR. Depending on your balance and how much you put towards paying it off each month, that high APR will likely cost you thousands of dollars over time, which is why you want a high credit score to land that low APR! Regular credit card ninjas don't even look at the APR, however. They just pay off the full balance of their card each month and don't have to worry about any interest. Ever!
Use 0% introductory APR cards to transfer high APR balances or make a big ticket purchase
If you're looking at 0% introductory offer cards, it should be because you want to pay down or off your existing balance on a credit card with a high APR. If you transferred $5,000 on a card charging you 24% APR to one with a 0% APR introductory rate, you will have time to pay off that debt without paying any interest on it.
Paying down a high-APR credit card balance is difficult and frustrating, especially when you see the APR converted to dollars on your statement.
If your wages are minimum or low, it can seem like a black hole of debt.
You plan to buy a big ticket item and need affordable financing. By financing, we mean a line of credit. In this case, you apply for the card, buy the item (scoring any signup bonus rewards), and then pay off the balance before the 0% interest period runs out.
If you're not doing one or both of these things, then an introductory 0% card may not be right for you.
You'll pay a lot in interest if you still carry a balance on every 0% introductory offer credit card.
Look before you leap into 0% introductory offer cards
Don't assume balance transfers are for free or that simple
It's easy to end up paying more than you think for a balance transfer—if you're not careful. Before you move your balance from one card to another, take a look at these key points.
Choose a card with a long 0% APR introductory period. If you are applying for a balance transfer or to purchase some expensive items and you know you will need as much time as possible to pay it off, look for a card with the longest 0% APR time period.
Some of the best balance transfer cards, like the ones we reviewed, offer introductory periods up to 21 months long!
Know how much the APR is once the introductory offer expires. It can be a shock when the standard APR kicks in when the introductory period expires. Make sure it is one you can afford.
Use the Cost-of-Debt Calculator to help you see what the standard APR will look like on a balance after the interest-free time period expires.
Take advantage of a rewards program that matches your lifestyle. After the standard APR kicks in, your card should have the benefits and rewards that reflect your lifestyle.
Balance transfer fees are charged per transaction. The fee is only applied to the total amount you transfer.
Transfer multiple balances from other cards. Consolidate your debt from any number of other cards by transferring the balances to a 0% APR introductory card as long as it stays below your credit limit.
Balance transfers will not affect your FICO score. Most people who transfer their balances and pay them down find it raises their credit score, especially those who do not cancel the first card.
Beware the dangerous game of credit card churn. Credit card churn is the practice of signing up for a new credit card to take advantage of the introductory offer and then canceling the card when the bonus period expires.
For example, signing up for a credit card that offers 0% APR on balance transfers for the first 12 months, transferring your whole balance for a year's free interest, then applying for a different card offering a similar sign up bonus and transferring your balance before the standard APR kicks in on the first card.
Credit card churn can hurt your credit score. Issuers have caught on to credit card churners and have made it more difficult to reap the rewards.
Most issuers will not offer the same sign-up bonus if you have canceled the card and attempt to reapply.
Transfer high APR, store-branded balances to a new card with an introductory offer. Most cards will allow you do this, but read the cardholder agreement. Chase will not allow balance transfers from store-branded cards that are not co-branded with another issuer.
1. Cards for those with low credit scores. These cards do not offer rewards or perks but do offer a 0% APR introductory period.
They are best suited for those who need to move their balance to a card with a lower APR to manage debt but have credit scores that may not qualify for cards that offer cashback or rewards.
The four best low-score, no-frills credit cards with 0% APR introductory offers are:
- Alliant Credit Union Visa Platinum
- Chase Slate
- Citi Diamond Preferred
- Citi Simplicity cards
We review these low credit score cards in detail below.
2. Cashback credit cards. This selection of cards offers the 0% APR introductory period as well as cashback rewards.
These cards are designed for those who might want to transfer a balance, but more for those who would like to use that introductory time to make big ticket purchases that they can pay down or pay off before the 0% APR period expires.
The four best cashback credit cards with 0% APR introductory periods are:
- AMEX Blue Cash Everyday
- Chase Freedom
- Citi Double Cash
- Discover it
We review these cashback cards in detail below.
3. Rewards credit cards. Rewards cards are best used for how you spend, meaning that if you often travel, you look for a card with the best travel rewards.
Cards that offer both a 0% introductory period and rewards are meant for those who want to purchase and save big in the rewards during (generally) the first year of having the card.
The best rewards cards with 0% introductory periods are:
- AMEX EveryDay
- Capital One VentureOne Rewards
We review a number of credit cards in detail below, within broader sections focused on our three major criteria—low credit scores, cashback, and rewards.
- Best for below average credit score — Alliant Credit Union Visa Platinum
- Best no-frills card with low standard APR — Chase Slate
- Best basic card for travelers — Citi Diamond Preferred
- Best card for extended introductory period — Citi Simplicity
- Best cashback card for groceries — AMEX Blue Cash Everyday
- Best cashback card for big ticket purchases — Chase Freedom
- Best cashback card for below average credit scores: Citi Double Cash
- Best sign-up bonus — Discover it
- Best card for rewards flexibility — AMEX EveryDay
- Best travel rewards card — Capital One VentureOne Rewards
Each of these cards listed below have good 0% introductory fee periods. Don't get too excited too quickly, however. There are credit score requirements for each. Here are the credit scores you'll need for approval for these cards:
- Alliant Credit Union: 670 and above
- Chase Slate: 690 and above
- Citi Diamond Preferred: 690 and above
- Citi Simplicity: 690 and above
Once you know where you stand in terms of credit score,compare the length of the introductory offer and the standard purchase APR that kicks in after it expires.
Select a card with enough time to pay off balances and an affordable APR
Citi offers the longest introductory. Both Citi Diamond Preferred and Citi Simplicity give new customers a long interest-free time period that amounts to above average savings. That is a big financial boost if you have a large balance to pay down. However, Citi Diamond Preferred charges a high APR penalty on late or returned payments for no less than six months. After that,there is no guarantee that Citi won't hike up your standard rates after the penalty time period. So, if you are not completely sure you can make the minimum payments on time, stay away from the Citi Diamond Preferred card.
The Alliant Credit Union's card offers the lowest APR, but the shortest interest-free period. The issuer is a credit union so applicants with low credit scores have a better chance of approval, but you only so long to pay your balance down interest free, and the intro APR time period is not exceptional like Citi.
Chase Slate has the highest APR at 17.24–25.99%. However, its interest-free time period is over a year and does not charge an APR penalty.
Balance transfer fees can add up to big sums
Alliant Credit Union charges no fees on balance transfers. That is really great considering you may want to transfer another balance to this card after the introductory period expires. Chase and Citi all charge comparable balance transfer fees and that can add up to large sums.
Basic benefits can help keep APR low
Most of the basic credit cards have limited benefits and protection, but that is what keeps the APR low. Both Citi cards provide the most benefits. With either card, you get the Citi Private Pass, which comes with presale tickets, event packages and concierge service, as well as extended warranty, price protection, and auto rental insurance. Citi Diamond Preferred also offers worldwide travel accident insurance.
Alliant credit union offers auto rental insurance and roadside dispatch. Both are great extras for a no-frills card.
Cashback programs can vary wildly. Some offer more redemption flexibility and others offer more cashback on where you spend. Required credit scores for cashback cards are generally higher than basic cards and this selection is no different. Here's what you'll need to move forward:
- AMEX Blue Cash Everyday: 700 and above
- Chase Freedom: 670 and above
- Citi Double Cash: 700 and above
- Discover it: 690 and above
Again, we like to look at the length of the introductory offer when considering which card is best.
Discover it offers the shortest interest-free time period, but also the lowest APR. When the 14 months are over, you will only pay APR 14.24–25.24%, and Discover doesn't charge a penalty APR on late payments.
The AMEX Blue Cash Everyday card and Chase Freedom card both provide an above industry standard interest free period. Both cards have similar APRs too, however, AMEX charges a penalty APR for late payments that can skyrocket your interest.
Citi Double Cash's 18 months interest free is restricted to balance transfers. This means that this card is better suited to those looking to pay down existing credit card debt and not those looking to finance a large purchase.
Cashback cards are great without penalty APRs
American Express and Citi both charge that awful penalty APR. This makes both of these cards less attractive than the others.
Citi and Discover both give you one break on late fees and waive your first late payment. It's a "feel good" perk on these cards.
Balance transfer fees are similar on all four cards.
Not all cashback programs are flexible on redemption
Each cashback program connected to these cards works a little differently.
AMEX Blue Cash Everyday credit card offers more rewards for groceries and gas but no flexibility in cash redemption. You get the most cashback at supermarkets, then at gas stations and select department stores, and points on all other purchases. There is also a statement credit signup bonus if you spend nominally in the first three months. Blue Cash rewards can only be redeemed as statement credits in $25 increments and expire if you haven't used your card in 12 months.
Chase Freedom gives you more rewards on all purchases. Above average % cashback rewards on special categories like gas and groceries and an everyday cashback rewards percentage of 1% on all purchases makes accruing points easy.
The sign-up bonus is $150 when you spend $500 in the first 3 months, which makes a boon of points that never expire easily accessible for many credit users.
Citi Double Cash offers you double the rewards on all purchases but restricts redemption to $25 increments. The "double cash" part of the card provides cashback rewards on purchases that are doubled when you pay the purchases off. However, you can only redeem cash in $25 increments, and points will expire if your card is unused for 12 months.
Discover it has no redemption restrictions and matches all non-bonus rewards earned in the first year. You get 5% cash back up to $1500 on combined purchases in the quarterly bonus categories and average rewards on other purchases. It also has a great sign up bonus where Discover matches all the non-bonus rewards you earn over your first year.
Choose a cashback card with benefits you will use
AMEX Blue Cash Everyday provides the most travel benefits. AMEX cardholders can take advantage of Destination Family discounted holidays, guaranteed lowest hotel rates, a personalized travel service, and a global assist program. The card also offers travel accident insurance, roadside assistance as well as auto rental insurance.
AMEX also offers purchase protection giving you back the difference if an item you bought goes on sale. The ShopRunner membership means all online purchases have free 2-day delivery and cardholders have access to presale tickets.
Chase Freedom cards give you access to all Visa Signature benefits. Holding a Chase Freedom allows use of Visa Signature Concierge, discounted shopping at the Visa Signature site, purchase protection, Visa Signature Luxury Hotel Collection and discounts at entertainment and sporting events. Cardholders also have travel insurance, emergency assistance services, lost luggage reimbursement, and auto rental insurance.
The Citi Double Cash and Discover it cards have fewer benefits. Citi provides a concierge service, travel insurance, and access to presale tickets, while Discover it offers travel deals and purchase protection.
These rewards cards require excellent credit scores. To receive either of these cards, you need a credit score of 700 and above.
Rewards cards are the hot selling point on credit cards these days, but you must select one for how you spend and what rewards will most benefit you to maximize savings.
Interest-free periods of a year or longer
AMEX offers a longer interest free period. The minimum expectation for most signing up for a balance transfer card is at least one year to pay down the balance. AMEX delivers offering an above average interest free period.
AMEX is best for groceries and Capital One for travel
The AMEX EveryDay card offers more points for groceries. You can also get extra points for purchases made through amextravel.com and one point for other purchases. If you make 20 or more transactions within one billing cycle, you can earn bonus points. There is also a sign up bonus that requires a modest spend to access. Redeem rewards through American Express Travel, purchases through the American Express Shop or on gift cards and entertainment. The value of the points depends on how you use them.
There are restrictions on redeeming rewards:
You must have earned a minimum amount of points in order to use them to pay for a purchase, and there are annual limits on where you use the points. However, there is flexibility in transferring your points to your frequent flyer program if your airline is an AMEX partner.
If you pay late, AMEX charges a penalty APR and cancels your points. An APR penalty of 29.99% kicks in for six months after a late or returned payment and AMEX cancels the rewards points you earned that month. AMEX charges a $35 fee to reinstate them.
The Capital One VentureOne Rewards card is strictly a travel rewards card. Earn miles per $1 spent and get a nice bonus for spending after you are approved. The program works by booking your travel online or through the Purchase Eraser app, after which Capital One will issue a statement credit towards the cost. Or purchase travel through the Capital One Rewards Center. Points can also be redeemed for cash.
High-end rewards cards come with all the bells and whistles
These 0% APR introductory credit cards offer the best deals on the market, but select one that suits your financial situation, provides enough time to pay down your balance, and has a standard APR you can afford when the interest-free period expires. After that, choose a card that gives you the perks that reflect how you spend and will best benefit your lifestyle. It's as simple as looking for long introductory periods and assessing your basic credit card needs!