Apply online for credit cards offering no interest on purchases for an introductory period. The credit cards below offer a 0% APR, usually from 6 to 12 months. The 0% APR feature will let you purchase items on the credit card and not incur any finance charges on those purchases during the introductory period. Compare no interest credit cards (0% APR on purchases credit cards below.)
What is APR on credit cards?
APR for credit cards is the annual interest rate that the credit card company charges when you don’t pay off your debt. On average, APR is between 14% and 16%.
If you fail to make a payment for one year on a credit card debt of $1000, you would pay $160 in interest at the end of the year with a 16% APR. Each month, you would owe around $13 in interest. If you did not make payment on your credit card for one year, you would probably be charged much more than $160 in interest; you would also have late payment penalties and would most likely be charged other fees.
With a no interest credit card, you don’t have to pay any interest on your purchases. This means that you won’t have to pay interest on your overdue payments. Of course, you are only likely to find a 0% APR credit card in one of the following cases:
You sign up for a charge card
You sign up for an introductory rate on any other credit card
0% APR on Purchases with Charge Cards
A charge card is not exactly the same thing as a credit card. Charge cards don’t have credit limits the way credit cards do. This means that you don’t have an official limit on how much money you can spend in a month.
There is a limit on how much you can spend, but it isn’t an official credit limit that you and your bank agree on. Instead, your bank uses your credit score, spending history, etc. to set an unofficial limit for you. For example, if you usually spend about $3500 every month, then your credit limit will probably be just above $3500. If you start to spend more than your usual $3500 by a significant amount (say you needed to take a trip that ended up costing you an extra $1000), the credit card company will evaluate your purchases and may reject excess charges. If your charges are rejected, you will be asked to pay down your card before the extra charges will be processed.
This means that over the course of the month, you can charge as much money as you can reasonably handle to your charge card as long as you can still pay it back in full at the end of the month. So, there is no APR on a charge card because you simply can’t miss payments. Missing a payment is grounds for your bank to revoke your card.
Charge cards are usually limited to people with very good credit scores because people with high credit scores are more likely to repay their debts on time every month.
Charge cards are also more likely to have high annual fees because the bank doesn’t make money on interest. For example, the American Express Platinum Card costs $450 every year.
0% APR Credit Cards
Whenever you see any other credit card with 0% APR on purchases, that is a temporary offer. It’s pretty standard for a credit card company to offer a 0% APR for some period of time between 6 and 18 months after you sign up. These temporary offers are meant to encourage new customers to sign up for their credit cards.
Low APR credit cards can be good for people who need to consolidate their debt or make a large purchase. In either of these cases, people can take advantage of an introductory 0% APR for credit cards to decrease the interest they have to pay. If you can manage to pay off your whole loan or pay for your large purchase during those first few months, then a 0% introductory APR credit card is a very good deal. However, if you cannot pay off your loan or significantly decrease it by the time the 0% introductory APR expires, you may just end up creating more debt for yourself.
You should also be careful to read the fine print: after the introductory period, your APR will revert to the normal rate. Generally, APR is somewhere between 11% and 22%. The credit card company will decide your APR based on lots of factors like your credit score, income, and payment history. So, before you sign for your introductory no APR credit card, you should be prepared to pay up to the highest possible APR.
Additionally, no APR credit cards tend to encourage customers to incur large amounts of debt. Without an interest charge, some borrowers will not prioritize repaying their debts. Once the introductory period ends, a credit card company can make a decent amount on interest in these cases.