Zero percent interest credit cards: Everything to know

Thinking about getting a zero percent interest credit card? Here’s what you need to know. (iStock)

If you have to make a large purchase in the near future, you might be thinking about opening up a zero percent interest credit card. However, before you take the next step, it’s important to make sure that you understand how these credit cards work. With that in mind, we’ve laid out the top considerations for someone who’s looking to potentially add a zero percent card to their wallet. Keep reading to learn more.

What is the benefit of a zero percent interest credit card?

As the name suggests, the biggest benefit of a zero percent interest credit card is that it allows you to avoid paying interest on your purchases for a set period of time. Many people use them when they have to make a large purchase so that they can spread paying off the purchase over a number of months without accruing any interest charges.

Credible can help you find the right credit card for you. Choose zero percent credit cards and get a breakdown of the annual fee, welcome offers, credit needed and more.


It’s important to note that zero percent interest is not the same as deferred interest financing. With deferred interest, interest starts accruing the day you make a purchase and is only waived if you pay off the balance in full before the deferred interest period has ended. 

With a zero percent interest card, interest does not start accruing until after the promotional period. However, if you have not paid off your charges in full by the end of the promotional period, you will start to be charged interest on the remainder of your balance.

What to consider when comparing zero percent interest cards 

Of course, before you open up a new line of credit, it’s important to compare cards so you can see which one will be the best fit for you. You can visit an online marketplace like Credible to compare different zero percent credit cards and find your perfect match.


Here’s a closer look at what you need to consider: 

The length of the promotional period: Typically, on a zero percent credit card, the introductory APR promotional period will last anywhere between 12 and 21 months. The longer this period lasts, the longer you have to pay off your purchases, but the longest periods are usually given to those with a higher credit score. 

The regular annual percentage rate (APR): After the intro APR period is over, you’ll begin to be charged the regular interest rate on any charges on which you carry a balance. You’ll want to be sure that you understand what that regular interest rate is and that you feel comfortable accepting the possibility of being charged at that rate.

Additional rates and fees: Credit cards also have additional fees for things like doing a balance transfer or making a late payment. You should also confirm that you understand all additional interest rates and fees that you could be charged. 


Credit cards vs. personal loans: Which is better?

If you’re worried about being able to pay off your balance before the promotional period ends, you may want to consider taking out a personal loan instead. Personal loans offer fixed payment, often at lower interest rates than a credit card. Personal loans can also have loan terms that are longer than your average zero percent intro APR, so you could be given a longer period of time to pay off your purchases. 

In the event that you think a personal loan might be a better fit for you, visit a marketplace like Credible to get a sense of your personal loan options.


Considerations when using a new line of credit

Whenever you take out a new line of credit, there’s always the possibility of encountering credit issues like experiencing a temporary drop in your score or becoming tempted to rack up credit card debt. With that in mind, follow the tips below to keep your credit in good shape:

Make your payments on time: Establishing a good payment history is important when you open a new line of credit. Focus on figuring out your billing cycle and making all of your payments on time to keep your credit score in good shape,

Pay as far above the minimum payment as possible: If you’re taking out a zero percent credit card, odds are you are unable to pay off your balance in full. However, you’ll still want to aim to pay as far above the minimum payment as possible to reduce your chances of accruing interest and sliding into credit card debt.