A vast majority of people get lots of credit card offers through the mail, and shred most of them without giving them the look that it deserves. However, when you see “0% APR” printed on top of the envelope, you will open it and read what the senders want to offer you.
So what is APR? This means the annual percentage rate, and it’s a type of interest that is mostly applicable to credit cards. It allows you to buy the stuff that you need, or do balance transfers over an agreed period without accruing interest. This means that you will be charged an agreed amount only over the agreed period, so you don’t have to worry about incurring additional expenses in terms of interest until that specific period is over.
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“0% APR” is temporary
Don’t be duped into believing that “0% APR” is permanent. It’s an offer for new customers who sign up for a new account with a lender, or a credit card provider. It only lasts for the period that is specified before you sign up for the credit card that carries that offer. It’s a promotional offer for a new purchase, balance transfers, or both, and its legal period is the limited time that is agreed between the cardholder and the provider at the time of signing up.
The law stipulates that “0% APR” should remain in force for a minimum of 6 months, unless when you are adjudged to be 60 days behind your repayment schedule. However, depending on where you look, you may find “0% APR” offers that could last for a year, 18 months, or more.
When does the interest rate begin to apply?
After you sign up for a new credit card with a financial company, you will be welcomed with a “0% APR” for an agreed period. This means that transfers and new purchases will not be charged interest for an agreed period, which could be six months, 12 months, 18 months, or even more.
However, at the expiry of the period, you will start paying interest on the balances that you accrue. It’s after the expiry of the promotional period that you will be charged interest on any accrued balance. The standard market interest rate will start being applicable.
Deferred interest financing
This is a unique and rare promotional offer where retailers may agree to deferred interest financing so that they can assist their customers to finance big purchases that include furniture, appliances, and electronics. In this regard, the amount that is advertised is similar to cash paid within the period in which the financing promotion is effective.
Does “0% APR” mean no interest?
It’s an absolute NO. On the surface, it may appear so, but if you clear your balance within the promotional period. If you delay your payment by a few dollars at the end of the promotional date, you are liable to pay all the interest from the start of the contract. So if you are to benefit from “0% APR”, you have to ensure that you clear the balance that’s accruing on your account before the final date of the promotion.
