What It Means
0% APR is a promotional offer that charges no interestInterest rateThe yearly percentage a lender charges for borrowing money, not counting fees; the APR adds certain fees to show a fuller cost. See more on a balance for a stated number of months. The Consumer Financial Protection Bureau (CFPB) gives the typical wording as "0% intro APR on purchases for 12 months." If some of the balance is still unpaid when the period ends, interest on it starts from that date at the card's regular APR. A deferred interest offer looks similar but works differently, and it can charge interest going back to the day of purchase.
Try It: 0% Intro APR Next to Deferred Interest
Example numbers to start. The same purchase and payments under each kind of offer, at the moment the promotion ends.
240190Paid in full in time, so neither offer adds interest.
The deferred interest offer adds about because the balance wasn't cleared. With 0% intro APR, interest starts only on the left, starting the day the promotion ends.
A rough estimate using the APR divided by 12 on each month's balance. Your card's terms decide the real figures.
How People Say It
- "It's gonna be 0% for the first year on purchases."
- "Pay it off before the intro period ends."
- "Is that true 0% or the paid-in-full kind?"
The Breakdown
Worked example. A $1,200 purchase on a 12-month promotional offer, paid down at $80 a month, on a card with a regular APR of 25%:
| 0% intro APR | Deferred interest | |
|---|---|---|
| Paid over 12 months | $960 | $960 |
| Left when the promotion ends | $240 | $240 |
| Interest added for those 12 months | $0 | About $190 |
| What you owe going forward | $240 | About $430 |
| Interest from then on | On $240, at the regular APR | On about $430, at the regular APR |
These are Buhata's example numbers, estimated from the APR divided by 12 on each month's balance.
What the result means. Under a true 0% offer, the unpaid $240 simply starts collecting interest when the promotion ends. The deferred interest version charges the interest that built up during all 12 months, and the CFPB notes you then pay interest on a balance that includes that charge. To avoid both outcomes, divide the purchase by the promo months: $1,200 over 12 months is $100 a month.
Good to Know
The CFPB points to the wording as the way to tell offers apart: "0% intro APR" is a zero interest promotion, while "No interest if paid in full within 12 months" signals deferred interest. By law, an introductory rate runs for six months or longer, unless a payment is more than 60 days overdue. A 0% rate doesn't rule out fees either. The CFPB says a card company can charge a balance transferBalance transferMoving what you owe on one credit card to another card, usually to use a low promotional interest rate for a set time. See more fee on a zero percent offer.
FAQ
Is 0% APR really interest free?
On the promotional balance and during the promotional months, yes. Fees such as a balance transfer fee can still apply, and whatever is left afterward collects interest at the card's regular APR.
What's the difference between 0% APR and "no interest if paid in full"?
A 0% APR offer charges interest on an unpaid balance only from the day the promotion ends. Deferred interest works another way: miss the paid-in-full deadline and all the interest that built up since the purchase is added to what you owe.
Can a 0% APR offer end early?
The CFPB says an introductory rate must run for six months or longer. That protection ends if a payment is more than 60 days overdue.
Do It in Buhata
Countdown and repeating entries
Add the promotion's end date to Countdown in Buhata, and set the monthly payment as a repeating entry sized to clear the balance before that day.
Open BuhataRelated Terms and Categories
- Balance transfer
Moving what you owe on one credit card to another card, usually to use a low promotional interest rate for a set time.
- Store credit card
A credit card offered by a retailer, either usable only at that store or co-branded with a card network, often with store discounts and a higher APR.
- Interest rate
The yearly percentage a lender charges for borrowing money, not counting fees; the APR adds certain fees to show a fuller cost.
Sources
Consumer Financial Protection Bureau, "How to understand special promotional financing offers on credit cards"; CFPB, "How long can I keep a low rate on a balance transfer or other introductory rate?"; CFPB, "What is a balance transfer fee? Can a balance transfer fee be charged on a zero percent interest rate offer?"
- www.consumerfinance.gov/archive/blog/how-understand-special-promotional-financing-offers-credit-cards
- www.consumerfinance.gov/ask-cfpb/how-long-can-i-keep-a-low-rate-on-a-balance-transfer-or-other-introductory-rate-en-15
- www.consumerfinance.gov/ask-cfpb/what-is-a-balance-transfer-fee-can-a-balance-transfer-fee-be-charged-on-a-zero-percent-interest-rate-offer-en-53
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