Published in: Credit Cards | April 1, 2020

Should I Apply for a 0% APR Credit Card During the Coronavirus Crisis?

By:  Lyle Daly

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It shouldn't be your first option, but it is a good backup plan in case of financial instability.

A man standing in an office while holding his phone and a credit card.

Image source: Getty Images

If you're worried about making ends meet due to the COVID-19 pandemic, a 0% APR credit card could help while money's tight. You can carry a balance without interest charges during your card's intro period, which would allow you to borrow money now and pay it back later. The catch is that the interest rate goes up significantly after that intro period ends.

Before you apply, you'll need to understand how these credit cards work and the risks involved.

How 0% APR credit cards work

A 0% APR credit card is a card that has an introductory zero-interest offer. Each card's offer specifies how long the zero-interest period lasts and whether it applies to the purchases you make, balance transfers, or both. If you want to put expenses on your credit card and pay them back later, you'd need a card with a 0% intro APR on purchases. A 0% intro APR on balance transfers is used for refinancing credit card debt.

You still need to make minimum monthly payments, and a missed payment could lead to the card issuer canceling your zero-interest offer. Once the zero-interest offer ends, your card will have a higher APR, and the card issuer will start charging you interest on any remaining balance.

Most 0% APR credit cards require that you have good or excellent credit, but there are a few available to consumers with lower credit scores. Card issuers also usually require that you have a form of income. Unemployment income qualifies, so if you're currently out of work, it's better to apply for unemployment benefits first. After you've received an unemployment determination that confirms your weekly benefit amount, you can apply for a credit card based on that income.

Using a 0% APR card during the COVID-19 crisis

What makes 0% APR cards so useful right now is that they offer a way to keep paying bills if your income has been cut and you don't have enough in savings. You can put those bills on your credit card, pay what you can of the balance (as long as it's at least the minimum amount), and then pay off the card in full once your situation has improved.

Keep in mind that you should only resort to this when absolutely necessary. If you have an emergency fund, use that first instead of taking on debt. And make sure you only use your credit card for essentials so that you keep the balance as low as possible. You don't want to overspend and have trouble paying the card off later.

There are some serious potential problems to be aware of. The most obvious is the possibility that you can't pay off everything by the end of the zero-interest intro period. In that case, you'll be stuck with credit card debt accruing interest at your card's new APR, which will make it even harder to pay down.

Carrying a large balance on your credit card will also increase your credit utilization ratio. High credit utilization can cause your credit score to drop.

Should you apply for a 0% APR card?

It's a good idea to apply for a 0% APR card if you either can't pay all your bills or you're concerned you won't be able to in the near future. That could be because you lost your job or your employer has temporarily shut down, or because you think there's a chance either could occur. 

Of course, you don't want to borrow money if you can avoid it. You should also apply for unemployment benefits if you're out of work and review all the financial assistance available to you. A 0% APR card is a last resort, but it at least gives you a safety net when you have no other options.

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0% APR & Low Interest