2 Big Risk Cards 0% APR

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Do not sign up for a 0% APR card without assessing these risks.


Key points

  • Some credit cards offer introductory interest rates of 0%.
  • These 0% APR cards can be a good option to fund purchases over time.
  • They do, however, come with some risk, including the possibility that you charge more than you can repay.

Credit cards are notorious for their high interest rates, but there is an exception. Some cards offer a 0% introductory rate on purchases. If you sign up for one of these cards, you may not pay any interest on the fees you charge for a set period, such as the first 12 months you own the card.

Being able to finance large purchases at 0% can be a great thing if you need to pay for items over time and don’t want to pay interest. But before signing up for a 0% APR card, you should be aware of these two big risks.

1. You might be tempted to overcharge

A big risk of a 0% APR card is that the promise of no interest charges may cause you to use your credit cards more often than you should. Overcharging could lead you to credit card debt, which can make your future financial life more difficult.

It is important to remember that you must always repay the full amount you have charged, even if you do not owe interest on purchases you have made with the card. This means that you will allocate future income that you have not yet earned to pay for purchases you make today.

To avoid losing control of your spending when you receive a 0% offer, you need to make sure you stick to your budget. For any charges you make, make sure you have the money in your bank account or a plan to get the funds and redeem the card in a timely manner.

The other big risk of a 0% APR card is that you might end up paying interest after all. This can happen if you fail to pay the full balance before the promotional rate expires.

Credit cards have high interest rates when the 0% rate is not in effect. Usually you will only have a limited time, such as 12 months or 15 months, during which you will not be charged the standard interest charges on the card. If you don’t fully refund your purchases at the end of this promotional period, you could find yourself stuck paying a lot of interest on the remaining funds owed.

To avoid this, be sure to stick to your spending limits and be sure to only charge the card the amount you are sure you can repay before the 0% promotion ends. By carefully monitoring your expenses and establishing a repayment plan, you can ensure that high finance charges don’t make the things you’ve charged for more expensive in the end.

As long as you have a spending plan and won’t charge more than you can pay off before the promotional rate ends, a 0% APR card can be a great way to pay for things over time. But you’ll want to be aware of these two big risks before applying for this type of card to ensure you’re able to mitigate them.

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