What’s the Difference Between 0% Balance Transfers and 0% Purchase Deals?

Learn to navigate these two APR offers

Young man enters his credit card information into laptop
•••

Nicola Katie / Getty Images

Some credit cards offer 0% APR deals, but there are two different types: one for balance transfers and one for purchases. These deals are usually for new cardholders, but issuers sometimes offer them for cards you already have. 

If you want to take advantage of these promotions, it’s important to check which type you’re getting, and how 0% balance transfer and purchase offers differ from each other. In some cases, a card may offer both types at once. 

Learn how to navigate these two distinct 0% APR offers without falling into any overspending traps that could land you deeper in debt.

What Is a 0% APR Purchase Promotion?

A 0% APR purchase promotion lets you buy things on your card interest-free for a specific time period. For example, you might get an offer for 12 months of 0% APR on purchases. That allows you to pay no interest on the things you buy for the first 12 months you have the card. 

The best 0% purchase offers right now last between 15 and 20 months.

0% APR Purchase Offer Pros and Cons

Pros
  • Good tool for paying off a large purchase

  • Can give some budget wiggle room

  • Only charge interest on post-promo balance

  • Rates after the promotion tend to still be lower than average

Cons
  • Temptation to overspend

  • End of promotional period can sneak up on you

  • Most 0% cards require good credit

Pros Explained

  • A good tool for paying off a large purchase: If you have big expenses coming up, like car repairs or holiday shopping, using a 0% card could be wise since you can spread out your payments over time without paying interest. Your goal should be to pay off the purchases before the promotional period ends.
  • Can give some budget wiggle room: While you shouldn’t make it a habit to spend beyond your means, there may be times when you need to. Knowing you have an extended amount of time to repay without interest can help.
  • Only charge interest on your remaining balance: With a 0% purchase offer, the issuer charges interest on what you don’t pay off at the end of the 0% period. This is different from deferred-interest offers common among store credit cards, which charge you backdated interest on your purchases if you don’t pay off your balance by the end of the zero-interest period.
  • Rates after the promotion tend to still be lower than average: Research by The Balance found that the “go-to” rate for 0% purchase cards is on average 2 percentage points lower than the average credit card APR.

Cons Explained

  • Temptation to overspend: If you know you have a dozen or more months before you have to pay interest, you might be tempted to spend more than you need to.
  • End of promotional period can sneak up on you: It’s wise to pay attention to when your introductory offer period expires. To be safe, set a calendar alert a month or two early so you’re not caught off guard and have plenty of time to make the deadline. 
  • Most 0% cards require good credit: The Balance’s research shows that 94% of cards offering such deals require good or excellent credit. So if your FICO credit score is below 670, you may not be able to get approved.

Regular purchase APRs hovered between 20.21% and 21.30% in 2020, according to The Balance’s research. 

What Is a 0% APR Balance Transfer Promotion? 

A 0% APR balance transfer promotion allows you to transfer a balance from an existing account and pay no interest until the promo period ends. These offers are pitched as a way to help you move high-interest debt to a new card so you can pay it down without interest. 

Be sure to read the details on these promos, though. Often, the issuer requires you to make the transfer within a certain number of days (60-120 days is common) and pay a balance-transfer fee that usually ranges from 3% to 5%.

Look for cards with a balance-transfer offer of at least 15 months; this is the most common 0% balance-transfer APR period, according to The Balance’s research.

0% Balance-Transfer Promotion Pros and Cons

Pros
  • Can save you thousands of dollars in interest

Cons
  • Balance-transfer fee often eats into any savings

  • You’ll usually pay interest on purchases

  • Danger of racking up even more debt

Pros Explained

  • Easier to make progress on an existing debt: With only the principal balance to tackle, your money isn’t being wasted on interest payments.

Cons Explained

  • Balance-transfer fee: Most balance transfer offers charge a one-time fee, usually between 3%-5% of the total balance. However, if you manage to pay off your balance in time, you can still come out ahead because of the interest you avoided.
  • You’ll usually pay interest on other purchases: With many cards, if you transfer a balance, you will lose the grace period on regular purchases until your balance is paid in full. That means interest will begin accruing from your purchase date, even if you pay the purchase balance in full each month.

How To Decide Which Offer Is Best for You

Purchase and balance-transfer 0% APR deals can be beneficial under the right circumstances. In both cases, the goal should be to try to have the balance paid off (or at least mostly paid off) by the time the introductory period expires.

If you’re planning to make a large purchase or you need a card to help you through a temporary pay cut or furlough, a 0% purchase APR offer could be a sufficient tool. If you’re struggling to pay off a balance on another credit card, a balance transfer offer could be a good move so long as you follow through on a payoff plan.

To pay off a balance transfer in time, divide the total amount owed plus any fees by the number of months in the offer. So if you owe $1,200 and the offer includes a 12-month period, you should budget for a $100 monthly payment.

Looking to the future, consider what a 0% card has to offer beyond just the zero-interest promotion. Examine a card’s overall terms and conditions, including the regular APR, fees, and the opportunity to earn rewards.

Key Takeaways

  • 0% APR offers can help you pay for credit card purchases or previous balances without additional interest for a set period of time.
  • Purchase APR offers are ideal for making large purchases that may take a little longer to pay off.
  • Balance transfer offers can help people who have previous debt, but be sure to crunch the numbers to come up with a payoff plan first.
  • Some cards offer 0% APR on both purchase and balance transfers. Consider other features, too, so you’re choosing a card with lasting benefits.