Personal Finance

Zero-Interest Credit Cards: The Ultimate Financial Hack or a Dangerous Trap?

David Beren

Published: December 11, 2024 10:22 am

Key Points

• Zero-interest credit cards can be incredibly appealing. 
• These cards are some of the best credit card offers available. 
• This might be the perfect card to help reduce debt. 
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In the world of credit cards, the idea of a zero-interest credit card seems like a unicorn. However, these credit cards exist, and many people gravitate toward them to avoid outrageous interest rates that can quickly add up. With the understanding it can be a good idea to manage large purchases or debt with a card like this, you still have to be careful and keep your spending in check. 

Great for Paying Off Debt

One of the best reasons to explore owning a zero-interest credit card is the amount you will save on interest. This isn’t worth ignoring, as the savings can be in the hundreds, if not thousands, every year. 

Because of this, many people apply for and receive a zero-interest credit card and balance transfer debt over to this card. The benefits quickly add up. For example, you have a credit card with a $4,000 balance and a 20% APR and pay $200 monthly. At this rate, paying off your debt would take 25 months, incurring just under $1,000 in interest. 

If you take the same balance with a 0% APR and $200 monthly payments, you’re paid off in 20 months without paying one cent of interest. While zero-interest credit cards don’t last forever, if you find a card with an introductory period of 21 months, you could save close to $1,000 dollars. 

Ideal for Large Purchases

A zero-percent APR credit card can be ideal for a large purchase. Whether it’s furniture, a television, or a vacation that you need some time to pay off a 0% card can be highly beneficial. This card would then give you time to carry the balance and pay as you can, provided you reduce the balance to zero before the zero-percent interest goes away. 

The Perks

Multiple credit cards offer 0% interest, so you can enjoy the perks of these cards without worrying about the interest. This means earning cash-back on every purchase or purchase protection, extended warranties, and even racking up travel points, all without interest. This situation also likely means that if you apply for a card with a great sign-up offer, you can take advantage and not worry about interest on your initial balance again. 

It’s A Trap

While these cards can be an excellent tool to pay off debt, they also have some caveats. If you miss one payment, your zero-percent interest likely jumps to 20% or above, and any benefits you’d receive quickly disappear. 

For example, Chase Freedom Unlimited indicates, “We will end your introductory APR if any required minimum payment is 60 days late, and apply the Penalty APR.” The penalty APR can be considerable and dramatically change how much you owe. 

How to Choose the Right Zero-Interest Card

If you’re looking to apply for a zero-percent interest card, there are a few factors to consider. First and foremost, find one with the lowest balance transfer fee. 

The second most important tip is to find the card with the longest intro APR period, or as close to 21 months as possible. If you are serious about getting out of debt, the intro period can make a big difference in how quickly you can do so. The same can be said about picking the right card ahead of a big purchase, as the longer the APR rate stays around, the longer you have to pay off the purchase. 

While these two tips are important, remember that a new credit card can also result in a hard inquiry on your credit, something to keep in mind if you’re also looking to purchase a home or vehicle simultaneously. 

The Best Zero-Interest Credit Cards