What exactly is 0% Credit Card APR?

Whenever you purchase something through a credit card, the bank levies a finance charge on the outstanding amounts. The finance charges are calculated in percentage (interest rates) every month, but the effective annual rates are represented in APR (Annual Percentage Rate). A 0 APR credit card does not include any finance charges over your expenses during promotional period.

How is a 0% credit card APR useful?
 

Credit cards are known to offer exciting rewards and offers from time to time. As a credit card holder, you get exclusive benefits on shopping, lifestyle, travel, and entertainment expenses. In addition, several credit card issuers also provide 0% APR credit cards for a limited period for their customers.

0% credit card APR can help individuals make large purchases or consolidate existing credit card debt. Such offers are available for a promotional period depending on the bank. With a 0% APR credit card, the expenses do not accrue any interest. However, you still need to pay the principal borrowed amount. Let us understand how a 0% credit card APR work and whether is it suitable for you to choose a zero-interest credit card.

The duration may range from 6 months to 24 months as per the bank’s terms and conditions. When you make a purchase through your zero-interest credit card, you don’t need to pay the finance charges, but you are required to repay the spent amount. Moreover, a 0% APR is not applicable to all purchases and, you need to ensure the card uses terms before applying.

Most banks offer 0-interest credit cards for balance transfers to help you consolidate your card debts and avoid high-interest payments. If you are looking for an affordable card with a low APR, IDFC FIRST Bank credit cards can be a viable option. These credit cards come with low finance charges starting between 0.75% to 3.5% per month and are free for lifetime. In addition, you enjoy exclusive shopping, travel, and entertainment offers on a range of brands and merchants.

Things to consider when applying for a 0% APR credit card
 

Here are a few important things you need to consider when applying for a 0% APR credit card.

• Zero APR period may not apply to all transactions
  
  While a 0-interest credit card can add to your savings, it’s worth noting that not all transactions are covered under interest-free transactions. Usually, fresh purchases, balance transfers, and online shopping are covered during the promotional period. Transactions such as cash withdrawals are excluded and, you may need to pay interest on those transactions.
• The interest-free period varies depending on the type of transactions
  
  Depending on the type of transaction the 0% APR period may vary. For example, the zero-interest period may extend up to 24 months for balance transfers and only 6 months for online purchases on the same card. Ensure to go through the terms and conditions.
• There is a limit to the amount that qualifies for 0 interest
  
  Every credit card comes with a credit limit as an upper spending limit. The credit limit becomes crucial when you are making a large purchase or opting for a balance transfer facility. In these cases, you need to ensure the amount that can qualify for 0 APR. Moreover, if you don’t pay your outstanding amount during the 0% APR promotional period, the bank charges regular interest on the remaining amounts.
• Some 0% APR credit cards may have retroactive interest
  
  While you may find a 0% APR credit card affordable to finance your purchases or debts, you may also be penalised for carrying your outstanding amounts beyond the promotional period. Therefore, you need to ensure paying all your credit card outstanding before the intro period ends.

A 0% APR credit card can be an affordable option if you have a card debt and are paying a high interest rate. You can use the interest-free promotional period to transfer your outstanding balances on 0% APR cards and pay off your debts conveniently. However, ensure to go through the terms and conditions of the card uses before applying. 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.