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Credit cards are one of the most versatile tools you can carry in your wallet. From getting extra rewards when swiping at gas stations or grocery stores to building your credit score, these pieces of plastic can impact your financial health. With so many options available, how do you choose?

When comparing different credit cards, one of the factors to consider is the card’s APR. APR, which stands for Annual Percentage Rate, is the rate of interest applied during your billing cycle if you carry a balance on your credit card. Most often we think of APR in terms of purchases, but other transactions, such as balance transfers or cash advances, may have different or higher APRs.

If you’re looking for ways to lower your payments, consolidate debt, or afford a large purchase, 0% APR credit cards may be right for you.

What is a 0% introductory APR?

A 0% introductory annual percentage rate means you won’t be charged any interest on your purchases within the timeframe determined by the offer. For example, a promotional period of 12 months means that you won’t be charged interest for the first year after the card’s opening date. You will need to continually make at least the minimum payment required, but no interest will be applied to the balance during this time.

Make sure to read the fine print of any credit card offers, especially when interest rates or balance transfer fees are involved. The advertised APR may only apply to one functionality of the card. Other fees may still apply during this time, including an annual fee, a balance transfer fee, or late payment penalties. Keep in mind that a 0% APR does not necessarily eliminate the balance transfer fee, so when using a credit card to transfer a balance, factor in this additional cost. Some credit card issues can charge up to a 3% balance transfer fee, so be sure to search for balance transfer options with lower, or no, balance transfer fees.

After the introductory rate ends, your rate will switch to the standard APR and any purchases or balance transfers after the promotional period will have this new rate.

What can I do with a 0% introductory APR?

This type of offer is flexible enough to suit a variety of borrower needs. If you have a current high-interest card with an existing balance, you can pay down debt more affordably by transferring your balance. If you aren’t sure how to perform a balance transfer, the process is simple. Once you’ve been approved for the new card, contact your lender, then have both account numbers handy. This process can take some time, so remember to keep making payments by the due date on your old credit card.

Even if you don’t have a balance to transfer, you can still take advantage of this special interest rate. For those planning to make a large purchase or experiencing an emergency, a 0% interest card is an alternative to taking out a personal loan, which may have a high interest rate. Plus, with a credit card, you can continue to use the line outside of the promotional period, which helps build your credit score. While applying for a new line of credit creates a hard inquiry on your credit history, the benefits of

Speaking of credit scores, a zero percent card is a smart way to introduce a new line of credit to your wallet. Having a variety of cards can be beneficial for more than just your credit score, as rewards and benefits differ between cards.

Remember that applying for a new credit card comes with financial responsibilities. You should always evaluate your DTI, or debt-to-income ratio, to ensure you can keep up with your monthly payments. To find your DTI, calculate the percentage of your gross (before taxes) monthly income that goes toward your rent or mortgage payment, credit cards, and all other debts, including student loans or child support. Lenders look at your DTI when reviewing credit card applications and use them in their approval decision.

For those new to credit cards, check out our guide, A Crash Course in Credit Cards, which covers the following topics:

• The difference between revolvers and transactors
• Choosing the card that rewards your spending type
• Calculating the value of cash back
• What goes into a credit score
• and more!
  

Let American Heritage be the partner for all of your financial needs. If a 0% APR credit card sounds like the solution for you, apply today!