<p>This study investigates the effect of transgranular cavitation on the necking-dominated tertiary stage of power-law creep of Sn-3wt.%Ag-0.5wt%Cu (SAC 305) alloy and compares it with pure Sn. Tensile creep tests revealed two stages of tertiary creep, wherein the strain rate increased gradually and then rapidly in the first and the second stages, respectively. The strain at the transition between the two stages was independent of stress in pure Sn and decreased with stress in the SAC alloy. The effect of stress on the increase in tertiary creep rate with strain was less in Sn than in SAC 305. Differences were observed in the failure modes, wherein Sn exhibited necking-dominated failure, and SAC 305 underwent cavitation along with necking. An analytical model that amalgamates the effects of cavitation on necking-dominated tertiary creep was developed to explain the experimental observations. The model predicted that the transition strain marks the onset of localization of creep strain in the neck due to either accelerated external area decrease or cavity growth, thereby providing a physical meaning to the two stages of tertiary creep. The model suggests that the initial cavity fraction, the applied stress and the creep stress exponent affect strain localization and the relative contribution of necking and cavitation to creep failure.</p>