Joyce sees a credit card offer that advertises a 0% introductory APR for 12 months. Which of the following best describes what this means for Joyce if she uses the card to make purchases?

• A. She will not be charged any interest on purchases made during the first 12 months.
• B. She will only be charged interest if she exceeds her credit limit.
• C. She will not have to make any payments for the first 12 months.
• D. She will never be charged interest on any purchases made with the card.

Answer: (A)

Verified step by step guidance

1. Understand the term 'APR': APR stands for Annual Percentage Rate, which is the annualized cost of borrowing money, including interest and fees. A 0% introductory APR means no interest will be charged during the specified introductory period.
2. Analyze the offer: The credit card advertises a 0% introductory APR for 12 months. This means Joyce will not be charged interest on purchases made during the first 12 months, provided she adheres to the card's terms and conditions.
3. Clarify the conditions: Joyce must make minimum payments on time and avoid exceeding her credit limit to maintain the 0% APR benefit. Failure to comply may result in losing the introductory rate and incurring penalties or interest charges.
4. Eliminate incorrect options: Review the provided choices. The option stating 'She will not be charged any interest on purchases made during the first 12 months' aligns with the definition of a 0% introductory APR. Other options, such as 'She will not have to make any payments for the first 12 months,' are incorrect because payments are still required.
5. Conclude the correct interpretation: Based on the analysis, the correct description of the offer is that Joyce will not be charged any interest on purchases made during the first 12 months, provided she meets the card's terms and conditions.