Credit Cards with a 0% Intro APR: What You Need to Know
If you’re looking to pay off debt, fund a big purchase, or cover expenses without interest, credit cards with a 0% introductory APR can be very appealing. With the average credit card interest rate at over 20%, applying for a card with a promotional 0% interest rate could save you a significant amount of money. However, it’s important to understand what happens when the 0% intro APR ends and how to avoid paying interest after the promotional period.
What Happens When the 0% Intro APR Ends?
The 0% intro APR period typically lasts 12 to 21 months. Once the promotional period ends, you will start accruing interest on any unpaid balances, including those you charged or transferred during the promotional period. It’s crucial to know when your promotional APR ends and the standard variable APR that will be applied afterward, so you don’t end up with a large balance on a card that starts charging interest.
How to Determine Your New APR
After the introductory interest rate expires, your APR will switch to a standard variable rate determined by your lender. You can find this information in your credit card agreement. To find out when your intro APR ends, review your most recent credit card statement or check your online account or mobile app. If you’re still unsure, contact your credit card’s customer service representative for assistance. Keep in mind that late or missed payments could result in the forfeiture of your promotional interest rate.
The Difference Between 0% APR on Purchases and Balance Transfers
If your credit card offers a 0% intro APR on purchases only, any balance transfers you make will accrue interest. Likewise, if the card provides a 0% intro APR on balance transfers only, any purchases you make will accumulate interest. Opting for a card that offers a 0% intro APR for both purchases and balance transfers is typically recommended. However, it’s essential to choose your spending approach wisely to avoid replacing old debt with new debt.
Understanding Intro APR on Purchases and Balance Transfers
If your credit card has a 0% interest introductory period for purchases, any spending you make on the card won’t accrue interest until the promotional period ends. Paying off your purchases in full before the intro APR period expires will prevent interest charges. If you transfer a balance to a card that only offers zero interest on purchases, your transferred balance will incur interest. Conversely, if you have a balance transfer card with a 0% intro APR, you can pay off high-interest debt during the promotional period. However, be mindful of any balance transfer fees and time limitations imposed by the card issuer.
What to Do If You Still Have a Balance
If you still have a balance after your intro APR period, here are some options to consider:
- Pay off your remaining balance as quickly as possible.
- Negotiate a lower interest rate with your credit card issuer.
- Transfer your balance to another card with a 0% intro APR.
- Request to be considered for a credit card forbearance program if you’re experiencing financial hardship.
The Importance of Keeping Your Credit Card Open
When the 0% intro APR period ends, it may be tempting to cancel the card if you’ve paid off your balance. However, keeping the account open, especially if it has no annual fee, can positively impact your credit score by contributing to a longer credit history and higher credit utilization. Additionally, consider using the credit card for everyday spending to take advantage of any cash back rewards the card offers.
Conclusion
Knowing when your intro APR ends is crucial to avoid unexpected interest charges. If you have a remaining balance, aim to repay it as soon as possible, negotiate for a lower interest rate, or transfer the balance to another card with a new 0% intro APR period. Keep in mind the benefits of keeping your credit card open and utilizing any rewards it offers. Being strategic and informed about credit cards with a 0% intro APR can help you save money and effectively manage your debt.
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