Understanding 0% Credit Card Offers

Despite new credit card laws designed to make credit card offers more transparent, many credit card companies still advertise 0% interest rates that may not last as long as advertised.  The main example is the 0% APR  for “up to 12 months.”  With these offers, credit card companies provide 0% rates for 12 months to consumers who meet their highest credit standards.  Applicants with good, but not great credit may only get a 0% rate for 6 or sometimes even 3 months.

When you apply for a 0% credit card that advertises a 0% rate for up to X months, special caution must be taken if you intend to use that card for balance transfers.  Specifically, if you are planning to transfer a balance, do not do it online.  Simply wait until your credit card arrives in the mail and transfer the balance when you can review the terms granted to you.  If you were lucky enough to get a 0% for 12 months, then go ahead and transfer your balance.  However, if you only got a 0% APR for 6 months, you may want to consider applying for a new credit card.

The same pricing strategies used to determine 0% rates are also used with long term interest rates.  In fact, multiple long term APRs are the rule, rather than the exception.  Generally, these rates are advertised with the verbiage “as low as,” and the lowest rate can be as much as 50% lower than the rate you actually get.  One current credit card offer advertises rates as low as 13.24%, but applicants can get a credit card in the mail with a 24% interest rate.  That’s quite a difference.

Ultimately, both the 0% and long term interest rate will be based on your credit profile regardless of the credit card you apply for.  However, some credit card companies offer better chances at getting low rates than others.  When applying for a new credit card, look for one that offers an APR range, i.e. 11.99-18.99%, rather than APR tiers, such as 13.24%, 17.24%, 24.24%.  With the former, you are likely to get a rate tailored more closely to your credit profile.  With the latter, you will get the best rate you qualify for, and one or two credit score points can turn into a 5% interest rate difference.

For additional information on current offers, please see the 0% APR credit card section of Credit Card Depot.