The pros and cons of 0% APR credit cards

Whether any credit card can positively affect your finances depends on how you use it. A 0 percent introductory annual percentage rate (APR) card can be beneficial if you make the right moves. If not, you could regret signing up for years to come.

Before you compare and choose a 0 percent APR credit card, it can help to know the potential advantages and disadvantages of these cards. Not only can this inform your decision when it comes to which card to get, but arming yourself with information can help you avoid ending up in more debt than you began with.

Pros of 0% intro APR credit cards

The main advantage of a 0 percent introductory APR credit card is obvious — avoiding interest. However, other potential upsides are more subtle. Consider these pros before you apply for any 0 percent interest credit cards.

You’d save money on interest

Credit cards with 0 percent intro APR offers can help you save considerable sums of money on interest. This would be true regardless, but — given the average credit card interest rate is currently more than 20 percent — it’s especially true if your alternative is a traditional credit card.

Now consider a 0 percent intro APR card with an introductory period of 21 months, which is in line with some of the best cards on the market right now. If you paid $200 per month on such a card, you could become debt-free in 20 months with $0 in interest paid. 

For example, the Wells Fargo Reflect® Card offers a 0 percent intro APR for 21 months from account opening on purchases and qualifying balance transfers made during the first 120 days. After the intro APR offer ends, a 17.49 percent, 23.99 percent or 29.24 percent variable APR applies. A 5 percent balance transfer fee (with a minimum fee of $5) applies to all balance transfers.

Your monthly payments could get lower

While interest savings could be your goal, going from a higher rate to a 0 percent intro APR can also lower your required credit card payment each month.

But remember, your credit card’s APR will pick up at your card’s regular rate after your intro APR period ends. In other words, your lower monthly payment won’t last forever.

You can pay down debt faster

Paying zero interest on consolidated debt with a 0 percent APR card geared toward balance transfers, also called a balance transfer credit card, can help you pay down your debt significantly faster.

Without any interest charges added to your bill each month, every cent you pay toward your debt goes directly toward your principal balance.

You can enjoy perks and rewards on spending

Another benefit is that some credit cards with a 0 percent intro APRs also let you earn rewards points or cash back on purchases. That means you can use your card for purchases, earn rewards on those purchases and then take advantage of the 0 percent intro period to pay it off over time. This also means you could earn a welcome offer in addition to the ongoing cash back or rewards points based on each dollar you spend.

Credit cards can also come with valuable perks and consumer protections that include cellphone insurance, purchase protection against damage or theft and extended warranties.

Your credit score can improve

Finally, using any credit card responsibly can help you improve your credit score. Paying down debt can help boost your score because 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.

Cons of 0% intro APR credit cards

While there are many benefits to consider with 0 percent intro APR credit cards, using your card the wrong way can cost you money. Here are the biggest potential downsides of using this type of credit card.

Late payments can foil your plans

First, understand that making a late payment on a 0 percent intro APR credit card can cause a forfeiture of the card’s introductory APR period, meaning you could wind up owing interest even though your intro period isn’t over. This is because late payments are normally a violation of the introductory offer terms. You may even end up paying a penalty APR that is higher than the card’s standard variable APR if you’re late or miss a payment.

New credit cards can temporarily impact your credit score

Applying for a new credit card results in a hard inquiry on your credit report that can ding your credit score. But keep in mind that the impact is temporary and minor.

Balance transfer fees can apply to transferred debt

If you plan to use a 0 percent intro APR credit card to consolidate high-interest debt, you’ll likely owe a balance transfer fee that typically falls between 3 percent and 5 percent of the amount you transfer.

While paying this fee may be well worth it for the interest savings, it’s still important to understand that balance transfers are seldom free.

Your intro APR period won’t last forever

Zero interest offers are for a limited time only — anywhere from 12 to 21 months, depending on the card. When the intro period ends, the remaining balance you owe will begin racking up debt at your card’s regular variable rate.

Remember that credit cards typically charge higher interest rates than other financial products, like personal and home equity loans.

Zero interest offers can make you complacent

Last but not least, here’s why 0 percent APR credit cards can entice you to carry debt: you know interest isn’t accruing on your purchases, your transferred debts or both, so it’s easy to become complacent and pay less each month than you should.

Credit cards with a 0 percent intro APR — especially those with rewards — can even entice you to spend more than you planned.

When getting a 0% intro APR credit card makes sense

If you’re responsible with your finances and want to save money on interest for a limited time, a 0 percent intro APR credit card can be a boon for your finances. Consider signing up for one of these cards if:

• You’re planning to make a large purchase and believe you can pay off the full charges within the card’s introductory period.
• You’re serious about getting out of debt, and you have a plan to pay off all or most of your balance during the card’s introductory period.
• You’re in between jobs or recently faced unexpected expenses, and you want a card that gives you time to pay down new balances interest-free.
• You’re disciplined enough to avoid racking up new balances you can’t comfortably afford to pay off.
• You consistently make on-time payments on credit cards and other bills without a problem or hardship.

When you shouldn’t get a 0% intro APR credit card

The following scenarios can indicate that a 0 percent intro APR card might cause more trouble than it’s worth:

• Credit card debt is a major issue in your life, or it was a major issue in the past.
• You’ve struggled to pay bills on time before and worry it will happen again.
• You’re concerned a new credit card could tempt you into overspending.
• You want to move your debt to a card with a 0 percent intro APR so you can spend more on your old cards.

If you’re nodding your head at any of these issues, you’re better off skipping 0 percent intro APR credit cards. You may even want to avoid taking on any new lines of credit at all — at least until you can responsibly develop a plan for your finances.

Alternatives for debt consolidation

If you have credit card debt already and need to consolidate, consider some alternatives to credit cards. For example, a personal loan would let you pay a fixed monthly payment with a fixed interest rate, and you’ll know exactly when you’ll be debt-free from the start. In addition, personal loans don’t make it easy to rack up new charges like credit cards do.

If you’re a homeowner who’s built equity in your home, a home equity loan or home equity line of credit (HELOC) might be helpful for consolidating your debts. Either option is likely to offer a lower interest rate than traditional credit cards do, but keep in mind these types of loans are secured by your home.

Whatever you decide, remember that your old debts and new charges won’t go away on their own. A 0 percent intro APR credit card can help you save money and buy you some time, but the rest is up to you.

The bottom line

When used correctly, a 0 percent intro APR credit card can save you hundreds of dollars in interest fees—and if you get a card for balance transfers, it can also help you reach your debt payoff goal even sooner. There are also other advantages such as additional consumer protection and earning rewards. But these cards come with stipulations, like forfeiting the 0 percent intro APR offer if you’re late with a payment as well as balance transfer fees that range from 3 percent to 5 percent of each balance you transfer.

If you’re disciplined in how you use the card and are fully aware of both the upsides and downsides, you can use one of the best 0 percent intro APR credit cards on the market as an excellent tool for your personal finances.