0% APR Credit Cards: Are they as good as they Sound?

A growing number of credit cards advertise a 0% APR feature. Essentially, this means you will not be charged interest on the balance you carry for an initial period of time. Not having to pay anything in interest sounds like a great deal, but is it too good to be true?

Not necessarily. The 0% APR credit card, when used correctly, can help you out. It can provide you with a short, interest-free loan. It can also help you pay off other credit card balances. To make it work for you, you'll need to understand what's all involved in a 0% APR credit card.

The 0% APR Period

APR is an abbreviation for "annual percentage rate." This is the interest rate that the credit card company charges on the balances you carry. It is expressed as a yearly rate.

The 0% APR means you will not have to pay interest on the account at first. The 0% APR usually lasts for a short time, ranging from six to twelve months. Some cards advertise a specific period, and others determine the timeframe depending on your credit score.

What the 0% APR can be used for

In most cases, the 0% APR will be applied to new purchases. In some situations, you'll find that the credit card interest rate can also be used for balance transfers. Certain credit cards even offer 0% APR on both purchases and balance transfers.

When the 0% APR applies to new purchases, you can buy items and then carry a balance for a few months. During that time, you will not be charged any interest. This gives you a small loan, free of interest. If you're planning on making a big purchase and then paying it off, the 0% APR on new purchases is a feature that lets you do just that.

For balance transfers, some cardholders find that the 0% APR period gives them a chance to pay off debt. Rather than struggling to pay the interest attached to a high balance each month, they can make payments specifically toward the principal amount. This works if you're trying to get rid of outstanding balances with high interest rates.

Other Features to Consider

While the 0% APR offer can be helpful, it does not last forever. Eventually, a regular interest rate will set in. You will then have to pay interest each month for any balance you carry. So check to see what the regular APR on the card before applying.

In addition to the 0% APR offer, most credit cards offer other benefits. They might include cash back, a rewards program, or a regular low interest rate. Be sure to look at these other benefits, as well as any other fees, before you apply.

In most cases, 0% APR credit cards really are as good as they sound. You will get an interest-free period that can help you out. Before filling out an application, however, you'll want to look at the fine print carefully, and make a decision based on all of the card's offerings. By doing that, you can be sure that the 0% APR credit card will work to your advantage.

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