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What Is a 0 APR Credit Card?

It’s like the search for the Holy Grail. Before the days of King Arthur and the roundtable of Camelot, people have hunted for this holy relic and its promise of eternal life. Just the same, consumers the world over have searched for their lives for the holy grail of the credit card world: a card with 0 annual percentage rates, or no interest at all. Such a card could provide eternal shopping, and a life without fear of debt.

The reality of the situation, however, may be slightly different. Don’t get us wrong. A card with 0 annual percentage rate is a beautiful thing. It allows you to carry debt on the card without fear of swamping your finances with interest payments. On the other hand, the 0 annual percentage rate is not a free ride to spend to excess. After all, most of these 0 annual percentage rate, or 0 APR cards, have a time limit. The carriage, so to speak, eventually turns back into the pumpkin, and then you could be left holding the bag with a maxed out credit card and a new APR of, say, 22 percent.

So, what exactly is a 0 APR credit card? Is it such a great deal anymore, or should you not chase after the holy grail? It depends, as with any great decision. If you plan to be making a lot of heavy purchases soon—such as to decorate a new house—you may want to find yourself a 0 APR card, but do so with the understanding that you must be able to pay that baby off when the 0 annual percentage rate special wears off.

Don’t just jump at any 0 annual percentage rate card, though. There are always other considerations to make when you’re on the market for a new credit card. For instance, how widely is the new card going to be accepted. If you travel a lot, this is important to know. MasterCard and Visa are the two most widely accepted brands of cards on the market, with 17 million and 16.2 million locations respectively.

And of course, every credit card now has a rewards program. What sort of rewards programs would suit you best—one that involves cash back and discounts on every purchase, or would you rather earn points toward travel and other prizes? Plus, no matter what the rewards are, compare the ratio of earned points to dollars spent. The higher this ration, the better the rewards program is, no matter what the rewards are.

Lastly, check the fees on these 0 APR cards. Is there an annual fee, a cash transfer fee, late fees, stiff penalties, etc.? These also could help you make up your mind about the card.

Finding Good 0 APR Credit Card Offers

While most of us wish that we could find credit cards that only had 0% APR, they can’t really exist because the credit card companies wouldn’t make any money. However, if you’re looking to save money with a lower interest rate, there are ways to find great deals on APR percentages.

Balance transfers

The trick with getting a 0% APR is to find a credit card that allows you to transfer other balances under that initial lower APR interest rate. While there is usually a time limit to these kinds of offers, they can help save you a lot of money in the long run. And if you think about it, these offers are much like getting the 0% APR on that other card, it’s just a matter of where you send the bill to.

Talking with the cards that you have

You might not know this, but if you’re a good customer for your current credit card company, you may be able to ask for a limited 0% APR period as well. If you’ve been paying your bills on time and keeping a fairly low balance, many companies are willing to reduce or negate the interest rate for a while. They want your business, so they’re usually willing to give you a deal to keep you using their card.

Going online

There are many credit card company comparison sites that will allow you to see which card companies are offering 0% APR for the first year of use or for limited time periods. And while this isn’t a permanent solution, you can see which cards are willing to take you on as a customer for a lower interest rate.

A word of caution

While it’s safe to say that you’re aware of the fact that 0% APR periods can be short, you need to be certain that you understand what the card company defines as a period. In most cases, the first purchase starts the cycle of interest free credit balances, as opposed to the first billing cycle end.

Look to see what the interest rate will be when the trial period is over. If the interest jumps dramatically, you might be in for an unpleasant surprise if you’re still carrying a balance. And the truth is that many of these credit card companies will increase their interest rates from 0% to 15% and even 24%.

Also realize that there might be restrictions in getting the 0% APR. If you make certain purchases or don’t make a payment within a certain time, you might revoke your right to that lowered interest rate. Read the fine print.