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How to Choose the Best 0% Purchase Credit Cards

Fiona Leake
Fiona Leake
  | Edited by Tom Church
Updated 4th February 2021

Planning on making a big purchase soon? 0% purchase credit cards could be the cheapest way for you to borrow. Read our guide for some tips on how to use interest-free cards and to find out what the best credit cards for purchases are.

What is a 0% purchase credit card?

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A 0% purchase credit card allows you to buy items and pay off what you’ve spent over a set period of time without any added interest. Clear your debt by the time the 0% period ends, then you’ll pay no interest and borrowing the credit won’t cost you a penny.

How do 0% purchase credit cards work?

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0% interest credit cards work by giving you a set period where no interest is charged on the balance you build up when making purchases. 

The 0% period can last as long as 20 months, depending on your credit history and what card you are accepted for. This period will begin the moment you receive the credit card.

Once this 0% period ends, your credit card will switch over to its standard interest rate. The average in the UK is 20.77% per year. Therefore, to make the most out of a 0% purchase card, you’ll want to pay off your balance in full before the interest kicks in. 

Remember, a 0% purchase card doesn’t mean you don’t have to pay anything at all. You still will be required to make a minimum payment every month.

What other credit cards come with 0% interest?

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Balance transfer credit cards are also available with 0% interest. You can move your existing debt from a high-interest credit card onto an interest-free balance transfer card. This 0% interest period can last up to three years. If you haven’t paid off your debt within this time period, standard interest rates will then be added onto your debt on the balance transfer card.

What is the difference between 0% on purchases and 0% on balance transfers?

Both of the following 0% credit cards offer interest-free periods on your credit card balance. However, there are some key differences between the two.

  • Balance transfer cards offer 0% interest for up to 36 months on transferred debt only. You will still be charged interest on any purchases you make using the card. 
  • 0% purchase cards offer 0% interest for up to 20 months on any purchases you make. You will still be charged interest on any balance transfers you do on the card.

Is a 0% credit card right for me?

If you are looking to spread the cost of expensive purchases like a TV, holiday or dishwasher without taking out a loan, a 0% purchase card can be a good option. 

You need to have a good or excellent credit rating to receive a long interest-free purchase card offer. If your credit rating isn’t as good you’ll either be rejected or receive a short 0% period that doesn’t make the card worth it.

If you are confident that you can pay back your purchases before the 0% period ends, then you can save hundreds of pounds on interest. Make sure you can afford the monthly minimum payments before deciding to make any large purchases.

However, if you are looking to get a 0% card because you are struggling with debt, then a balance transfer card would be a much better option. It allows you to focus on paying off your debt with no interest, rather than adding to it with purchases.

Pros and cons of 0% purchase credit cards

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Pros

  • Spread the cost of large purchases over a long period of time without paying interest.
  • Enjoy no interest for up to 20 months.
  • Extra payment protection - Under Section 75 of the Consumer Credit Act, credit card companies are jointly liable as the retailer when you make a purchase over £100. That means if you need a refund you have some extra protection.

Cons

  • High-interest rates will resume after the 0% period ends so make sure you clear your balance before.
  • Doesn’t include balance transfers and you will pay a fee plus interest on any transfers you do.
  • You can lose the 0% offer if you miss any monthly payments.
  • Introductory period isn’t guaranteed as you may receive a shorter offer when you apply.

4 Interest-free credit card golden rules

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Before rushing in, getting a 0% credit card and buying everything in sight, make sure you follow our four golden rules!

1. Borrow as little as possible 

If you got a 0% purchase credit card to buy something in particular, only buy that and don’t get tempted by unnecessary things. Always use your savings first before borrowing money to make a purchase.

Only borrow to buy something you’ve budgeted for and know you can afford to pay it back monthly. Don’t use a 0% credit card to make purchases whenever you feel like it.

2. Make AT LEAST the minimum monthly payments

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Set up a direct debit for at least the minimum amount required each month. Despite the 0% interest offer, you still do need to make minimum payments on the card every month.

If you miss a payment, you’ll lose the 0% offer and may be hit with a penalty. 

Try to pay back more than the minimum every month to avoid still having a balance at the end of the 0% period.

3. Try to clear your balance in the 0% period

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The interest-free period on a purchase card can last up to 20 months. However, as soon as this ends the interest rate will skyrocket on your remaining balance.

Make the most out of your 0% purchase credit card by paying back the money you owe before expensive interest gets added. Do this by dividing what you’ve spent by the number of interest-free months and set up a direct debit for this amount every month. This way, it’ll work like a loan and you’ll be certain it’ll be paid off before interest is added.

For example, you may have made a purchase that cost £2,500. If your purchase card had a 20-month interest-free period, you would have to pay £125 a month to clear it before interest is added.

4. ‘Up to’ cards might not give you the offer you want

If a purchase card is advertised as ‘up to 20 months interest-free purchases’. This means that if you have a weaker credit score, then you might not receive 20 months at 0% but only 12 months, for example. Pay attention to the words, ‘up to’.

Always bear this in mind before applying, just in case you don’t get the offer you want.

How to compare the best interest-free credit cards

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Before choosing your 0% purchase card, you might want to compare a few things first. Deciding which of these things are most important to you depends on your circumstances.

  • Length of the 0% period - it might be tempting to go for the longest interest-free period (up to 20 months). However, this might encourage you to use the card unnecessarily and borrow more than you need. Instead, choose a card with a 0% period length that you need. You might only need 12 months to pay back what you borrowed, so pick that over 20 months.
  • The standard APR - the annual percentage rate (APR) tells you what it’ll cost you to borrow on your card once the interest-free period ends. Try to pick a card that has the lowest APR in case you haven’t cleared your balance by the time interest kicks back in.
  • 0% on both purchases and balance transfers - some cards do offer 0% in both instances. These ‘everyday’ or ‘all-round’ cards can be worth it if you want to clear debt but also need to make expensive purchases. It can be difficult to keep track of when the 0% period ends on two different things which could result in you having more debt than you started with. Tread with caution!
  • Annual fees - 0% purchase cards rarely have annual fees. Found a card with fees? Keep looking for one without.

I can’t meet my minimum credit card payments due to coronavirus. What should I do?

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Coronavirus has put a financial strain on many. If you have a credit card and are struggling to meet your minimum repayments, you may be eligible for help.

The Financial Conduct Authority (FCA) has introduced measures that allow you to request a freeze on credit card repayments for 6 months. However, you may still be charged interest in this period.
You have until the 31st March 2021 to request a freeze but make sure you agree with your lender before stopping repayments. This won’t leave a bad mark on your credit history either due to the exceptional circumstances.

If you can afford to keep paying, it’s best to do so as you will still be charged interest during this holiday period.

All payment holidays must end by 31st July 2021.

FAQs

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