Do Zero Interest Credit Cards Exist?

Tara Seboldt
Jul 22, 2022

You may have heard that a hidden cost of credit cards comes from interest charges. With an average interest rate of 16.45%, credit card debt can add up quickly.

But what if there was a way to get a zero-interest credit card?

There are a few ways to get an interest-free credit card. Of course, there are still advantages and disadvantages to these cards.

Keep reading to learn more about interest-free cards and how to get one.

Zero Interest vs 0% APR

When searching for a zero-interest credit card, you’ll probably run into two phrases: “0% APR” and “zero interest.”

Technically, both of these mean the same thing. You won’t be charged interest on your credit card.

However, the different wording is important:

  • 0% APR (Annual Percentage Rate): A 0% APR card is often a limited-time intro APR offer credit card companies use to get new cardholders to sign up. The 0% rate may only last for six months or the first year of card ownership.
  • Zero Interest: Zero-interest cards usually mean the card doesn’t have an interest rate. You’ll never pay interest on your card balance.

How do 0% APR Credit Cards Work?

A 0% introductory APR is one of the most popular credit card offers. Credit card companies charge no interest for a limited period of time.

The exact length of your introductory period varies between cards. The fine print in your credit card agreement will tell you how long your intro APR period is. It’s often listed as a number of billing cycles, which are usually around a month long.

For example, your new credit card gives you 0% interest for six billing cycles. You won’t pay interest on any balances you carry during approximately the first six months from account opening. You’ll go back to a traditional variable APR at the seventh billing cycle.

That means any balance you carry at the end of the seventh cycle will be charged interest.

Zero interest. No asterisks needed.


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Balance Transfer Offer vs New Purchase Offers

There are two types of introductory rate cards: new purchase APR and balance transfer APR.

New Purchase Intro APR

A purchase APR card offer means you’ll get a promotional APR on purchases you make on your new card. You simply start using the card as you normally would. You won’t be charged interest on the purchases made during the introductory APR period.

Some intro APR offers include an additional sign-up bonus in the form of a statement credit. If you spend a certain amount within a few months of account opening, you’ll get a statement credit to put toward your balance.

You’ll want to note that purchase APRs usually only cover purchases. That means you’ll still pay interest for services like a cash advance.

Intro Balance Transfer APR

A balance transfer is when you move your credit card balance from one card to another. To take advantage of balance transfer credit cards, you have to have a qualifying balance transfer.

Let’s say you have an outstanding credit card balance of $1,000 on a card with a regular APR. You open a card with an intro balance transfer APR of 0% and move your balance to the new card. You’ll stop accruing interest on your balance because it’s now on the card with a 0% intro rate.

However, terms apply to balance transfers. They often have a balance transfer fee to move your balance. This is a percentage of your balance.

For instance, your balance transfer fee for a $1,000 balance is 3%. You’ll have to pay $30 to move your balance over.

Additionally, you may have to complete your balance transfer within days of account opening to qualify for the promotional period.

Should I Use 0% Intro APR Credit Cards?

Intro APR welcome offers can be a great way to make a large purchase without paying interest.

It’s important, however, that you’re disciplined enough to pay off the balance before your promotional period ends. Most intro APR offers chargeback interest on any balance not paid off after the promotional period.

In addition, just because you don’t have interest charges doesn’t mean you can skip monthly payments. You still have to make at least the minimum payment on your account to stay in good standing.

Keep in mind, not paying the minimum payment by your due date could cause your credit card issuer to remove your 0% APR. You may also face a penalty APR—an extra-high interest rate—for missing or late payments.

Finally, 0% intro APR offers are usually reserved for people with extremely high creditworthiness. If you don’t have a Good to Excellent credit score, you might not qualify for the introductory offer.

How Do Free-Interest Credit Cards Work?

Unlike an introductory APR, zero-interest credit cards have no interest attached to the card agreement. There’s no promotional period—your card just doesn’t charge interest.

These cards are becoming more popular with non-traditional credit card issuers and lenders. The goal for many of these cards is to make owning and using a credit card responsibly more accessible.

Does Zero Interest Mean Free Interest?

It might sound too good to be true, but credit cards with no interest do exist.

That being said, no interest doesn’t mean you won’t pay for the card in other ways. Many no-interest credit cards charge fees.

Some fees you might run into on a zero-interest card include:

  • Annual fees or monthly fees
  • Foreign transaction fees
  • Late fees

Do Zero Interest Credit Cards Still Build Credit?

By far one of the biggest perks of a no-interest credit card is the ability to build credit history. Like a regular APR card, your on-time payments to a zero-interest card can help you improve your FICO score.

The upcoming Possible Card, for example, helps you build credit by having no interest or late fees.

By using your card responsibly and making on-time monthly payments, you can add positive payment activity to your credit report—a major factor in your credit score.

Can I Still Earn Rewards with an Interest-Free Card?

Yes, many zero-interest cards are still rewards credit cards, especially introductory rate cards.

While rewards rates vary between card rewards programs, common types include:

  • Cash back rewards
  • Bonus cash back in spend categories like drugstores, gas stations or supermarkets
  • Travel rewards
  • Rewards points

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Is a Zero Interest Credit Card Right for Me?

Zero-interest cards can be a great tool to help you build credit and establish healthy financial habits.

However, you might also find it’s a little too easy to spend without interest and regularly hit your credit limit.

Consider the pros and cons of zero-interest cards when shopping for your next credit card.

Pros

  • You won’t pay interest on your purchases.
  • You’ll have less stress if you can’t pay your bill in full each month.
  • No interest charges make it easier to pay off debt without accruing more.

Cons

  • Not paying interest could make it easy to overspend.
  • You’ll still have to make a minimum monthly payment to stay in good standing.
  • Paying a monthly or annual fee might not make sense if you don’t spend much on the card.

The Bottom Line

No-interest credit cards can be a helpful financial tool for building credit history—especially if you’ve struggled with interest charges in the past.

Start looking for the right card for you by comparing credit card offers. Be sure to read over the fine print so you know exactly what fees you might be charged instead of interest.

Tara Seboldt

Tara is a financial writer with over five years of professional writing experience. She previously worked at a financial planning firm. Tara uses this professional experience to help readers better understand their finances and make smart financial moves. When she’s not writing about money, Tara enjoys spending time in the Idaho mountains hiking, camping, and skiing.

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