0% APR Card Deals Persist, But Approval Bar Is High
No-interest offers last for 12 months or so, but applicants need good credit
Despite a year filled with financial and economic distress, there are still plenty of credit card 0% purchase APR deals to be had if you’re a consumer with good credit.
Unlike promotional balance transfer offers that were dialed back significantly in 2020, 0% purchase APR deals haven’t changed much. In fact, The Balance found there are still a number of offers that let you pay zero interest on new purchases for 12 months or more. These deals may be appealing if you’re looking to spread out the cost of holiday expenses or a big purchase without paying interest.
One change that did come about this year, though, is that some offers aren’t as easy to get as they were at this time last year. Banks are now more cautious about lending to borrowers with less-than-perfect credit histories.
“I think all issuers are going after the most creditworthy cardholders,” said David Shipper, a senior analyst for market researcher Aite Group who focuses on payment cards. “The offers might be better for the more affluent customers or those with a really solid credit history, because those people are low risk and really valuable right now.”
- About 25% of all credit cards are offering new cardholders 0% purchase APR deals right now, which has been the norm all throughout 2020, despite a pullback of similar 0% balance transfer offers as card issuers brace for possible financial losses.
- Most no-interest purchase promotions last between 12 and 15 months, with a few cards advertising longer-term offers right now.
- The longest 0% purchase APR deals are found on cards that don’t offer rewards, but if you’re willing to give up a few interest-free months to get rewards, cash-back cards may have the best options.
- Once the intro APR periods end, The Balance found cards with these deals have an ongoing APR that’s 2 percentage points lower than the average credit card APR.
- Nearly all credit card offers tracked by The Balance that include a 0% purchase APR promotion recommend applicants have good or excellent credit, and approvals may be even more stingy right now because lending standards are still tight.
0% Purchase APR Deals Prevail During the Pandemic
Credit cards that let new cardholders pay no interest on purchases for a limited time are not uncommon right now, despite ongoing economic turmoil. About 25% of all card offers tracked by The Balance on an ongoing basis are advertising such promotions right now (80 out of 316 cards), a ratio that has held constant throughout 2020. Meanwhile, fewer cards are offering 0% balance transfer offers now than were before the pandemic began.
This aligns with what marketing research firm Competiscan has observed this year, too. To get an idea of what the credit card market looks like every quarter, Competiscan tracks credit card offers—primarily those sent via email and traditional mail—that go out to more than 40,000 U.S. consumers.
Jessica Duncan, director of research and insights for Competiscan, told The Balance that 0% purchase APR promotions are still the top deal advertised to prospective cardholders, and that they’ve changed very little this year. But the number of promotional offers that advertise both 0% purchase and balance transfer APR deals has dropped by 25%.
“The balance transfer offers come with a higher likelihood of risk to the issuer,” she said. “It’s essentially like the bank takes on a loan right off the bat. Even for consumers, moving, say, a $5,000 balance to a new card in a time of economic uncertainty poses a big risk.”
Zero-percent purchase rate offers pose less risk, while possibly encouraging consumers to use credit cards during a time when they’re increasingly favoring debit cards, according to Duncan. The offers are a marketing tool, after all.
“To see all the low interest rate offers that are still available now, it does seem to be encouraging spending,” she said. So for now, 0% purchase offers are sticking around.
What 0% Purchase APR Offers Look Like Right Now
The Balance found cards advertising 0% purchase APR promotions give you about a year, on average, to pay down your balances with no additional cost. Twelve to 15 months is the offer length sweet spot, with 65% of all no-interest purchase deals falling into that range, based on The Balance’s analysis of promotions offered online. More generous deals are quite rare.
These figures align with what Competiscan researchers have found, too.
“Overall, there has been marginal movement with introductory purchase offer length, and the average term continues to trend north of 12 months,” Duncan said.
The Balance found that just over half of all cards (54%) advertising 0% purchase APR deals right now also offer cardholders rewards on an ongoing basis. That’s good news for someone seeking a card that offers more value after the limited-time APR promotion ends, but such multipurpose cards typically don’t give consumers the very best no-interest deals.
“Non-rewards cards tend to have the longest offer terms, which makes sense because low interest rates are their primary focus,” Duncan said. The 0% purchase APR deals advertised by non-reward cards are typically longer than 14 months, according to Competiscan’s Q3 research.
If you want a new credit card with a 0% purchase offer and rewards, a cash-back rewards card is likely your best bet. Competiscan found that those rewards cards offer the longest average introductory purchase APR offer compared to cards that offer points or miles.
“Some issuers are coupling both an introductory 0% APR and the opportunity to earn an additional cash-back sign on bonus to help sweeten the deal,” Duncan said, citing the Chase Freedom Unlimited and the American Express Blue Cash Everyday Card as examples. Both cards are currently offering new cardholders a 0% purchase APR for 15 months alongside a cash-back sign-up bonus.
Extra Long Offers Are Rare
Only a few cards give consumers more than 15 months to pay off a large purchase right now. Just four of the card offers tracked in The Balance’s database give new cardholders 18 interest-free months on purchases, none of which offer rewards:
The Citi Simplicity and Citi Diamond Preferred Credit Card 0% purchase APR offers actually improved this year. Prior to June 2020, both cards only offered 12 months of interest-free purchases, according to data tracked by The Balance.
One card—the U.S. Bank Visa Platinum Card—rises to the top of the pack with a generous 20-month-long 0% purchase APR deal for new cardholders, despite dropping its balance transfer APR promotion earlier this year.
Ongoing Interest Rates Are Below Average
Even if you can’t finish paying off your balance before a 0% purchase APR deal ends, you still may be better off than you would be if you were running a balance on a different kind of credit card. When no-interest promotion offers end, The Balance found that the average ongoing purchase APR is nearly 2 percentage points below the average purchase APR of all credit cards tracked in our database.
Don’t Overlook Mail Offers
The Balance tracks credit card offers advertised online, but that’s not the only place you can snatch up a no-interest deal on purchases.
“If issuers can target people more specifically through mail, they will,” Shipper said, which means the offers that arrive in your mailbox may vary from what you see online. “[Issuers] can pull data to find out your deposits at other banks, other loans you have, and so on. So they determine a segment that they want to give really lucrative offers to.”
Competiscan, which more closely tracks offers sent via mail or email, has found these other channels are still good places to look for 0% APR promotions, particularly for cards already in your wallet.
“We would advise consumers to keep an eye on their email for offers for their existing credit cards,” Duncan said. “Issuers like Discover have maintained a steady pace of extending promotional APRs to their existing cardholders both as balance transfer offers as well as limited-time purchase APR offers. Also depending on credit quality, their inbox or mailbox just might deliver the best option through the opening of a new card.”
You’ll Likely Need Good Credit to Qualify for the Best Deals
Much like the credit cards that offer the highest rewards-earning rates, cards with limited-time 0% purchase APR offers are often marketed to consumers with good or excellent credit scores.
Based on the cards tracked by The Balance, nearly 94% of all cards currently advertising no-interest purchase offers—including those with the longest deals—recommend applicants have good or excellent credit scores. A FICO credit score (which is used in most major lending decisions) is considered to be good if it’s between 670 and 739. Excellent credit scores are classified as 740 and above.
Consumers with higher credit scores are likely to receive more generous targeted 0% purchase offers, too. Competiscan found that the average FICO score of those who received a promotional APR offer in the mail in Q3 was 767. For perspective, the average FICO score in the U.S. is 711.
If you don’t have stellar credit, there are far fewer options. The Balance found there are more lenient offers available, but the cards are niche and the offers are much shorter:
- U.S. Bank Harley-Davidson Visa Secured card: 0% for 12 months
- Discover it Student Cash Back: 0% for 6 months
- Discover it Chrome for Students: 0% for 6 months
There is one other card in The Balance’s database that offers a competitive 15-month-long 0% purchase APR offer and is accessible for applicants with fair credit (a score of 580-669, based on FICO standards): the Chase Slate card. However, you can no longer apply for the card online. If you really want this card (and that 15-month-long 0% APR offer), you can apply for the card by visiting a Chase branch, according to information Chase emailed to The Balance.
Credit Card Approval Standards Are Still High
Credit scores aren’t the only factor banks consider when approving card applications, but it’s a good indication of consumer trustworthiness. Higher credit scores indicate a consumer can manage credit well and is more likely to repay the balance they rack up while enjoying a 0% purchase APR deal, for example.
“There hasn’t been a big uptick in delinquencies, but issuers are still being conservative and managing credit limits very carefully,” said John Cabell, director of banking and payments intelligence for J.D. Power. “Zero-percent offers fall into that category of managing risk.”
While recent reports indicate consumers aren’t completely underwater with debt burdens, card issuers are still being more mindful of consumer creditworthiness. Approximately 27% of U.S. card-issuing banks are upholding tighter lending standards as 2020 comes to a close, according to the Federal Reserve. That’s an improvement from the record high of 71.7% reported this summer, but still well above pre-pandemic levels.
“I don’t think standards are going to loosen dramatically in the next several weeks, either,” Cabell said. Holiday spending figures and the possibility of another government stimulus package may impact how lenders approach new card applications heading into the new year.
“Everyone is just sort of waiting to see what will happen right now,” Cabell added.