How 0% Intro APR Credit Cards Can Quietly Lead to More Debt

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A credit card with a 0% interest offer can feel like a financial fresh start. The pitch is simple: spend now and pay later, with no immediate cost.

But that apparent breathing room can be misleading. Americans are carrying record amounts of credit card debt, and many balances continue long after the promotional period is over.

A report from the Consumer Financial Protection Bureau found that the average credit card annual percentage rate, or APR, reached 25.2% for standard cards and 31.3% for store cards. In the same period, consumers paid a record $160 billion in interest, up from $105 billion in 2022, along with another $31.3 billion in fees. About 15% of cardholders now make only minimum payments each month, the highest share in at least a decade.

One major reason balances are becoming harder to escape is the rise of cards with 0% introductory APR offers.

According to the CFPB, cards with promotional 0% rates accounted for $899 billion in purchases and $352 billion in outstanding balances by the end of the year, or roughly one-third of all card spending and revolving debt.

These offers can temporarily lower the cost of carrying debt, but the CFPB found that accounts with teaser rates typically end up with higher long-term balances than cards without them.

The issue is that most people do not clear their balance before the promotional window closes. Only about 21% of cardholders with 0% APR offers pay off their balances in full before the deal expires. The remaining 79% still owe money after the deadline, when interest begins to apply, often at rates above 25%.

"Zero percent APR cards encourage overspending because there is no urgency," Eric Croak, a certified financial planner and president of Croak Capital, tells Money. "Once interest is eliminated, time becomes infinite. Spending $4,000 over 15 months doesn't sound so bad when you break it up into $267 payments. The purchase amount doesn't change, but the perception of it does."

Credit card companies also use more than a low rate to attract customers. Nearly two-thirds of introductory 0% APR offers include a rewards-based welcome bonus, usually tied to a spending requirement in the first few months. Almost all of these cards also charge no annual fee, which can make opening and using the account seem less expensive.

As the CFPB notes, the effect is that these promotions encourage consumers not only to open new cards, but also to keep spending after the introductory period ends.

"Your brain recognizes the reward now, and your payment is some undefined time in the future," Croak says. "Psychology changes actions quickly."

Even after the promotional rate expires, most cardholders do not close the account. About 83% keep their cards open when the introductory APR period ends, meaning fewer than 1 in 5 consumers shut the account once the "free" borrowing period is over. More than half continue using the card afterward.

That matters because the same cards that encourage extra spending often remain open once higher interest rates kick in, allowing balances to linger and finance charges to pile up.

"They give you time to 'figure things out,' but the reality is they allow you to forget," Croak says. "There is a mental disconnect between spending now and paying off later that only expands with time."