What’s the Difference Between Balance Transfer & 0% APR Credit Cards?

Credit cards with an introductory interest-free period are a great way to save money and reduce debt, but it’s important to understand the terms of these deals before you apply. 

There are two common introductory offers you’ll find among credit cards, and they serve very different purposes: 0% APR on balance transfers or 0% APR on new purchases. Some cards even offer both. 

While balance transfer cards are good for debt consolidation, 0% APR cards — the shorthand typically used for cards with interest-free intro periods on new purchases — can help you save on upcoming purchases made after you open the card account. How you intend to use a new card with an introductory APR offer will make a big difference in the type of card you choose. 

Here are the big differences between these two card types, and how you can decide which card works best for your financial goals. 

Balance Transfer or 0% APR — Is There a Difference?

A credit card’s APR (annual percentage rate) is essentially the interest rate you’re charged for borrowing money. This rate is applied to any balance that remains on your account after your statement is due. Not only are credit card interest rates high — some can surpass 25% APR — but they compound daily, so the charges can add up exponentially fast. The best way to avoid paying interest on your credit card is to pay your balance in full each month. 

But before the ongoing APR (which you’re assigned upon approval) kicks in, some issuers offer an introductory 0% APR promotional period. These intro periods may apply to new purchases, balance transfers, or both. The type of offer most valuable to you depends on how you plan to use the card. Here’s the difference:

0% APR on New Purchases

If you have a large upcoming purchase to make, and want to pay it off over time, you’d be better off with a 0% APR period for new purchases. Say you plan to buy a $1,000 couch and you want the option to pay it off over time. If you open a card with an 18-month 0% APR intro period and make your purchase within the first month, you can pay as little as $55 per month toward the cost of your couch over that intro period, and pay off the purchase in full by time interest kicks in. Just make sure you have a plan to cover the purchase within the intro period — after that, you’ll pay the regular APR on any remaining balance. 

0% APR on Balance Transfers

A balance transfer card, on the other hand, is more useful for existing debt balances. You can transfer your existing balance from one account to a card with a 0% intro APR on balance transfers, and make interest-free payments toward your debt during this period. Again, it’s important to have a plan for paying your balance in full by the time the intro period ends. If you don’t, you’ll begin to accrue interest at the regular APR on any balance you haven’t yet paid.

0% APR on Both New Purchases and Balance Transfers

Some credit cards offer an introductory 0% APR period for both purchases and balance transfers. They may be the same length or differ. For example, the Chase Slate Edge℠ Card has an introductory 0% APR on new purchases and balance transfers for 18 months followed by a 17.99– 26.74% variable APR. The Citi Simplicity® Card offers 0% intro APR on new purchases for just 12 months, but has a 21-month intro period for balance transfers, variable APR of 16.99% – 27.74% thereafter.

This is why it’s important to understand the different purposes these types of intro periods can serve, so you can choose the card that’s best fit your goals. 

How Does a Balance Transfer Work?

A balance transfer is a debt payoff strategy in which you move debt from one account to another, usually to take advantage of an introductory 0% APR period. The goal is to pay your debt in full before the introductory period ends, or you’ll once again accrue interest on the remaining balance. 

You can save a lot of money on interest with a balance transfer, but there is often still a cost. Be aware of high balance transfer fees, says Cary Carbonaro, a certified financial planner and author of The Money Queen’s Guide. 

Some cards charge over 3% to 5% of the amount transferred, with a minimum payment of $5 or $10. But even with a balance transfer fee, you’ll likely save much more than you would paying your balance with interest over the same time period. 

Here’s an example:

Say you have a card with a $5,000 balance and a 16% interest rate, on which you pay the minimum monthly payment. You transfer your balance to a card with a 18-month intro period, balance transfer fee of 3%, and an interest rate of 18% after the interest-free period ends. If you pay off your balance in full over the intro period, you’ll save the greatest amount of money, but even if you can only make the minimum payment toward your balance during that time, you’ll still pay less. Here’s a look at the difference. 

It’s important to pay attention the fine print of your card agreement when you open a balance transfer card, says Dominique Broadway, an award-winning financial planner, CEO, and founder of Finances De·mys·ti·fied. For example, the balance transfer fee that’s advertised may only apply if you transfer your balance within a certain period after account opening, or there may be a cap on the amount you can transfer before the fee increases. You should also know the regular APR you’ll be charged after the intro period, so you’re not surprised by any interest costs.

How Long Are 0% APR Offers?

Interest-free introductory periods for both new purchases and balance transfers can vary depending on the card you choose. Often, they range between 12 and 18 months, but you can find 0% intro periods for as long as 21 months. 

In many cases, the longer the intro period, the better, since you’ll have more time to pay down your balances. “When you’re at 0% APR, you should be paying as much as you can to get that balance [down],” Carbonaro says. 

But you should also consider whether you’ll want to use the card after the intro period ends, and the payments you can realistically make over the interest-free period. 

For example, you may find a card with only a 15-month intro period on new purchases, but it comes with 2% flat cash back rewards. If you know you can pay down your purchase within that 15-month period anyway, it can make more sense to choose the shorter intro period, so you also get the benefit of long-term value on your spending. 

You should also read the terms of your intro offer closely to ensure you get the full benefit, Carbonaro adds. If you pay late or your payment is returned, your issuer may revoke the intro offer, and your balance will begin accruing interest at the regular APR. In some cases, you may even take on additional fees or a higher, penalty APR. 

Once the introductory period ends, you’ll pay your assigned regular interest rate for any remaining balance, as well as any purchases or transfers going forward. As the end of your intro period approaches, pay close attention to your balance so you know how much more time you have to complete your payments, Broadway says.

The Best 0% APR Cards Right Now 

Wells Fargo Reflect Card

The Wells Fargo Reflect® Card has one of the longest introductory periods for purchases and qualifying balance transfers available today. You’ll have 0% intro APR for the first 18 months from account opening and if you make on-time minimum payments throughout that time, you can extend the intro period for an additional three months — up to 21 months from account opening in total. There’s a variable APR of 15.99% – 27.99% after that.

If you plan to use the card for balance transfers, you must make the transfer within 120 days of account opening and pay an intro 3% balance transfer fee (a minimum of $5) After the first 120 days, the fee will increase up to 5% ($5 minimum). 

Citi Simplicity® Card 

The Citi Simplicity® Card offers a 0% introductory period for 12 months on new purchases, and on balance transfers for 21 months after account opening, variable APR of 16.99% – 27.74% thereafter. Balance transfers must be made within the first four months of account opening to qualify for the 0% APR, and there’s an intro balance transfer fee of 3% of each transfer (minimum $5).

U.S. Bank Visa Platinum Card 

The U.S. Bank Visa Platinum Card has a 0% APR introductory period for the first 18 billing cycles after account opening on new purchases and. The card also comes 0% APR for 18 billing cycles on balance transfers posted to your account within the first 60 days of account opening. There’s a variable APR of 17.49% – 27.49% thereafter, depending on your creditworthiness. 

There’s no penalty APR, but there is a late payment fee of up to $40. You can also expect a balance transfer fee of $5 or 3% of the balance — whichever is greater. 

BankAmericard® Credit Card

The BankAmericard® Credit Card has a 0% introductory period for the first 21 months for new purchases and balances transfers. Balance transfers must be made within the first 60 days of account opening to qualify for the 0% APR. There’s a variable APR of 14.99% – 24.99% thereafter. You’ll pay a 3% balance transfer fee (minimum $10).

Chase Slate Edge℠ Card

The Chase Slate Edge℠ Card has 0% APR on both new purchases and balance transfers for 18 months. You’ll pay a balance transfer fee of 3% ($5 minimum) if you transfer your balance within 60 days of account opening, or a 5% fee ($5 minimum) after that. There’s a variable APR of 17.99% – 26.74% after the intro period ends. Even after the intro period, you can lower your interest rate by up to 2% each year that you make payments on time and spend at least $1,000 on purchases.

The card doesn’t come with an annual fee and you also may qualify for a credit limit increase when you make all of your payments on time and spend at least $1,000 on purchases within the first six months.