True 0%, deferred interest, and intro 0% cards

Three things get sold as "0%". Only one of them is.

True 0% APR

You borrow a set amount and pay back exactly that amount. Manufacturer auto and equipment programs, Apple Card Monthly Installments and the equal-payment plans at some furniture and mattress stores work this way. The usual catch is not interest; it is what you give up. Many manufacturers offer 0% or a cash rebate, not both. Always price the deal both ways.

Deferred interest: the trap

Store cards at most big retailers advertise "no interest if paid in full in 12 months." Interest is calculated from day one at a high rate, often around 30%, and held in the background. Pay every cent by the deadline and it disappears. Leave anything unpaid and all of it is added at once.

The math: $2,000 on a 12-month deferred-interest plan at 29.99%. You pay $150 a month, so $200 is left at the deadline. You don't owe interest on $200. You owe about $352, the interest on the full balance for the whole year.

Intro 0% credit cards, including the 21-month cards

These are not deferred interest. Months you already used at 0% are never charged back. That matters, and it is why we list them. But they are built to make money from people who don't finish, so here is the fine print:

  • Under federal rules, the issuer can end your 0% rate once a minimum payment is more than 60 days late, and can then raise the rate on your existing balance.
  • A payment 30 or more days late can be reported to the credit bureaus, which raises what you pay everywhere else.
  • Balance transfers usually cost 3% to 5% of the amount up front. On $5,000 that is $150 to $250 before you start.
  • Whatever is left at the end starts accruing normal card interest, often 18% to 29%, from that day forward.
  • Some intro periods are counted in billing cycles, not calendar months.
How to use one safely: set autopay for at least the minimum the day you open it, divide your balance by the number of intro months, and pay that amount every month. $3,000 over 21 months is about $143 a month.

Source for the 60-day rule: Regulation Z, 12 CFR 1026.55(b)(4), Consumer Financial Protection Bureau.