No Interest Financing: Your best Frenemy

The only way I was able to get out of debt was by budgeting and using no interest financing. I had a bad credit score and was making all the common credit card mistakes. It was all worth it though because I got out of debt quickly by using temporary no interest credit cards. That’s why we’ll go over what does 0% APR means and how you can use it effectively.

A 0% APR is a common credit card promotion that will give you 12-18 months of no interest on your credit card charges. You will still be required to make the minimum payments, but there will be no finance charges for the duration of the promotion. If you miss a payment though, that 0% APR can quickly disappear and turn into a 25% APR nightmare.

What is APR? APR is the Annual Percentage Rate that is commonly on your credit card or loans. Your APR is calculated yearly, but you will see finance charges billed monthly. If you don’t have a 0% APR credit card and hold a balance, you’ll see a finance charge on your credit card statement. That finance charge is calculated from the APR you currently have to your current statement balance.

Everything You Need To Know About 0% APR Credit Cards

With little information and a big dream of getting out of debt, I began learning what does APR mean on a credit card. Knowing that I could use 0% APR credit cards to slowly dig my way out of debt while avoiding finance charges.

Is 0% APR really a good deal?

Yes, it’s exactly like a no interest loan. If you’re trying to get out of debt, you can spend money on your card that has 0% APR while paying off your other credit card balances or loans. For reference, most credit cards have an average APR of 17%. The bank isn’t making any money from you through finance charges, which is why having a credit card with 0% APR is a really good deal.

Does 0 APR mean no interest?

0% APR mean no interest. That means you will not be accrue any finance charges during your 0% APR promo period. At the end of the no interest period, the standard APR begins.

What is a good APR?

The lowest possible is 0% APR, meaning you can borrow money from the bank (typically 12-18 months) without incurring any finance charges. That term is contingent on you paying off your minimum statement balance every month. I highly suggest turning on auto-pay and making sure you set up a calendar notification when the 0% APR period ends.

Finding the right 0% APR Credit Card

Most major banks have offers for 0% APR credit cards. Getting approved for these credit cards depends on your credit score and income. The better your credit score and income level, the higher your chance is for getting approved with a large credit line. If you don’t have a great credit score, you could always buy a tradeline to temporarily boost your credit score.

How do I know when my 0% credit card is ending?

Personally, I create Google Calendar notices at the end of the term and a few months before the end of the 0% credit promotion. This is so I know when it’s ending and when to begin paying it off. Alternatively, sometimes you’ll see when your special interest promo ends on your credit card statement. They don’t make it easy to find so it might not apply to all banks.

Why isn’t it easy to find when your 0% APR promo ends? Because the banks count on you to miss that date so you can begin paying finance charges. It’s not in a banks best interest to allow you to pay them back before they make money from you. It makes a lot of sense since banks are a business. The 0% APR is just to lure you in as a customer and they expect you to spend more frivolously when it’s interest free. Of course, this works because a lot of banks have been using 0% APR promotions for years.

How many 0% APR credit cards can I get?

There isn’t a limit to the amount of 0% APR credit cards you can get. The only limitation is getting approved with a large credit limit. If you’re trying to get out of debt, a big part of it is limiting your spending habits. Don’t get 0% APR credit cards if you don’t have self-control. You’ll very likely just dig yourself deeper into debt. Just a friendly warning because I’ve seen it happen to some close friends. Hopefully when you make it out of debt, you won’t need to think about APR interest. You’ll more likely be thinking about getting credit card and bank bonuses to make that free money.

Is it a good idea to max out my credit card if it has no interest?

If you are serious about paying off your debts and not concerned about your credit score, it is a good idea to max out your credit card with no interest on it. This WILL cause your credit score to go down, but if you are actually budgeting your money and paying off your debts, this will help you get out of debt fast. That’s because you won’t be paying any finance charges even though you’re going over your utilization. If you are concerned about your credit, I would recommend a credit boost so you might qualify for a higher credit card limit.

In some of my other posts, I talk about credit card utilization and how to never go over 30% usage on any single credit card. That’s because your credit score will just drop. But personally, I maxed out my no interest credit cards just so I could get out of debt. Your credit score will recover. But the hundreds or even thousands of dollars you pay in finance charges will not be refunded by the bank. If your planning on getting a home or auto loan, I highly suggest you focus on your credit score first.

You Need to make minimum payments to keep the 0% rate

If you miss a payment, the rate shoots up to the 25% APR range (depending on the bank). Just because you have a 0% credit card doesn’t mean it’s free money. It’s a temporary “free loan” that should be used to help you get out of debt and not help you to spend more frivolously. For reference, I get things on Amazon for free to curb the shopping habit.

Should I pay off a 0% APR credit card?

Depending on your financial situation, it may make more sense to pay off all your other debts before paying off a 0% APR credit card. With each no interest financing promo, there is a time limit of 12-18 months. If you still have a balance at the end of the promotion, you will start getting the high interest rate finance charges. At this point, it makes more sense to pay it off while using ANOTHER 0% APR credit card if you still need to pay down debt.

Pay Off High-Interest Credit Cards First

Finance charges on high interest credit cards can easily keep you locked in debt. That’s why having a 0% APR credit card is the best tool you have to fight down your debt. You can begin paying off your high interest credit cards while putting your usual expenses on your no interest fee credit card. If the amount is very high, you can also consider using a balance transfer.

Are balance transfers bad for your credit?

Balance transfers may be bad for your credit if you exceed your credit utilization limit of 30%. Once you’re over that percentage, your credit usage will look pretty bad. Even worse when it’s over 50%. But besides hurting your credit, you’ll also need to understand that credit card balance transfers typically have a 3% fee. So if you’re transferring $1,000 to your credit card, expect a $30 fee. Depending on your situation, it may make more sense to pay the balance transfer fee than paying the high finance charges that you may be incurring on another credit card. Do your research, run the numbers and then make the best decision for you.

What happens when your 0 APR ends?

When your 0% APR promo ends, the regular APR for the credit card kicks in. You should pay off your credit cards before you reach this point, but in the event you can’t, expect to pay high finance charges. That’s why you can just get more 0% APR credit cards before your no interest timer runs out. Any time you sign up for a credit card (even if it has 0% APR), it will state what the APR after the promo ends. You’ll probably see it on your credit card statements too.

Does 0% APR hurt your credit score?

Interest rates have no impact on your credit score. That means, you can have any level of APR and it won’t hurt or improve your credit score. The more important thing to consider is that if you have a good credit score, you’re more likely to get approve for the lowest APR on a credit card, including those with 0% APR promotions. If you have bad credit, it’s likely that you will not get approved.

Can you keep doing balance transfers?

It’s possible to keep doing balance transfers to avoid paying your debts. This is helpful if you’re juggling debt and trying to avoid finance charges. It’s not the most ideal situation to be in, but if you’re struggling it’s the best way to survive without getting robbed by finance charges.

Can you extend the 0% interest term on your credit card?

In my experience, you cannot extend the no interest financing promotion with a bank. You received 0% APR from a bank for a year or more, they want to start making money from your debt. Out of curiosity, I tried calling several banks to see if that was an option and I was denied. This happened when I was working my way out of debt in 2012, but things may be different now. I still see no incentive for the bank to extend your interest free loan when they know they can make money just by saying, “no.”


Credit scores can be repaired in time, but the money you spent in finance charges is never returned. That’s why we learned about 0% APR credit cards and how you can use them to get out of debt. APR is the Annual Percentage rate which is the interest rate on a credit card. You can qualify for 0% APR credit cards with decent credit (600 or higher depending on the bank). There isn’t a limit to how many 0% credit cards you can get; you just need to have good credit to be approved.