0% APR offers

Two offers that look identical

There are two completely different products marketed as “0% APR”, and telling them apart before you sign is the single most valuable thing on this page.

True 0% promotional APR. No interest accrues during the promotional window. When it ends, the go-to rate applies to whatever balance remains — going forward, from that date. This is what most bank credit cards offer.

Deferred interest. Interest accrues from day one at the regular rate and is merely deferred. Clear the balance in full before the window closes and it is waived. Miss by a day, or by a dollar, and the entire accumulated amount is added to your balance retroactively. This is the standard structure for store cards and medical or furniture financing.

The marketing is close to indistinguishable. The language to hunt for is “no interest if paid in full by” — that conditional is deferred interest. True promotional offers say “0% intro APR for 15 months” without the condition.

The cost of confusing them is not small. Put $3,000 on a 26.99% deferred-interest plan and pay it down steadily to $200 by the deadline: you miss the deadline by $200, and roughly $570 of accrued interest lands on your balance at once. You are charged for every month you carried the debt, not for the sliver you failed to clear.

Balance transfers

A 0% balance transfer is genuinely useful, and it is not free: the transfer fee runs 3–5% of the amount moved and is charged up front.

Run the arithmetic rather than the intuition. Moving $8,000 from a 24% card to an 18-month 0% offer with a 4% fee costs $320, and clears the balance in 18 payments of $445. Paying that same $445 against the 24% card instead takes 23 months and costs about $2,014 in interest. The transfer is overwhelmingly worth it — provided you clear it inside the window.

Two conditions decide the outcome:

1. Divide the balance by the number of promotional months and pay that amount. $8,000 over 18 months is $445, not the $160 minimum. Minimum payments are calibrated to leave you with a balance when the rate resets.
2. Do not use the card for purchases. On many transfer cards, purchases carry the regular APR while payments are directed to the highest-rate balance — which can trap you paying interest on new spending throughout the promotion.

What ends a promotional rate early

Promotional APRs are conditional. Common triggers for losing one:

• a payment more than 60 days late, which can also trigger the penalty APR;
• closing the account or exceeding the credit limit, depending on the terms;
• in a few agreements, any late payment at all.

The CARD Act requires promotional periods to run at least six months and requires 45 days’ notice before most rate increases — but a rate reset caused by your own delinquency does not need that notice.

The auto version

Manufacturer 0% financing is a different animal, because it is nearly always offered instead of a cash rebate. The interest you avoid is paid for by the discount you gave up, and the better deal depends on your alternative rate. That comparison is worked through on the auto loan APR page.

The one-line summary

True 0% offers are among the cheapest credit available and are worth using deliberately. Deferred interest is a bet that you will not slip, with the entire accrued interest as the stake — and it is offered precisely where people are least likely to read the terms.