nigel woollsey

Nigel Woollsey

Online Writer
Published: 11/02/2019

At a glance

  • 0% purchase cards offer you an introductory period that allows you to pay off purchases without accruing interest.
  • Once the agreed interest-free period ends, interest will be charged against any remaining outstanding balance.
  • Hefty fees and interest may apply when withdrawing cash, so make sure you only use your card for purchases.

Compare 0% purchase credit cards

Spread the cost of a purchase interest-free! Compare 0% interest credit cards and repay your debt for free before the 0% period ends.

What are 0% purchase rate credit cards?

Whether you are buying everyday goods and services or making a large purchase, 0% purchase credit cards offer the opportunity to spread the cost of your spending without having to pay interest for a specified period.

How 0% purchase credit cards work

0% purchase credit cards work by not charging interest on spending made using the card during the pre-defined interest-free period. It is possible to spend up to a pre-set credit limit, which might be a few hundred pounds or may be several thousands of pounds, depending on your individual situation.

At the end of the introductory interest-free period, interest will then start to be charged on the amount borrowed at the provider's standard purchase rate. For this reason, it is best to try and pay off as much of the balance as possible before the interest-free period ends.

At the very least, a minimum payment – as set out by the provider – must be paid each month, even during the interest-free period. Setting up a standing order or a direct debit is the best way to make sure minimum payments are always paid. If a minimum payment is missed, a penalty fee may be charged, the interest-free period may be withdrawn, and your credit rating could also be adversely affected.

Given the need to try and clear the borrowing before the introductory period ends, and so avoid paying the standard purchase rate, it makes sense to pay more than the minimum payment if you can. Indeed, when spending using a 0% purchase credit card, it is sensible to have in mind your own personal 'credit limit', that you think you will be able to repay within the introductory period and make your own repayment plan. One option is to divide the total balance owed by the number of interest-free months the card offers, giving you an evenly split amount to pay off each month. Alternatively, it may be the case that you only want to make the minimum payment each month, and then save up enough to pay off the rest just before the interest-free period ends.

Once the interest-free period does come to an end, interest will start to be charged on any outstanding balances and on any further purchases. At this point, it may be sensible to transfer an outstanding balance to a 0% balance transfer credit card, giving you more time to pay off the debt interest-free. If you plan to carry on spending, it will probably be best to look for another 0% purchase credit card.

What can you use a 0% purchase credit card for?

Most sellers, whether they are on the high street or online, will accept credit card payments – it is usually possible to use a 0% purchase credit card for any purchase.

It is also possible, but not necessarily advisable, to use a 0% purchase credit card to withdraw cash. The interest charged for withdrawing cash is usually extremely high. The same expensive fees are also likely to be charged if taking other types of cash advances, which can include buying travel money, or gambling.

Some 0% purchase credit cards also allow balance transfers and money transfers, but the interest-free periods can be shorter, and the fees potentially higher, than if opting for a credit card specifically aimed at these types of transaction.

Pros and cons of 0% purchase credit cards

  • If you want to make an expensive purchase, and don't have the money saved up, a 0% purchase credit card allows you to pay for the item in full and then spread the cost over a number of months. Provided the balance is paid off in full before the interest-free period ends, no interest will be charged.
  • Some credit cards have incentives to spend, including cashback and loyalty points, which can add up to a tidy additional sum.
  • When buying something with your credit card worth between £100 and £30,000, you have certain rights under the Consumer Credit Act 1974, which mean you could get your money back should anything go wrong.
  • If you don't clear the outstanding balance before the end of the interest-free period, you will likely be charged a high interest rate on any outstanding balance.
  • When withdrawing cash using your credit card, interest payments can be high and accumulate quickly.
  • If you fail to make a minimum payment or go over your credit limit, a penalty fee will usually be applied and you could lose your 0% deal.

Moneyfacts tip

Moneyfacts tip nigel woollsey

Credit cards make it easy to spend money that you don’t have; always keep track of your spending and have a plan in place to repay your borrowing.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

various credit cards

At a glance

  • 0% purchase cards offer you an introductory period that allows you to pay off purchases without accruing interest.
  • Once the agreed interest-free period ends, interest will be charged against any remaining outstanding balance.
  • Hefty fees and interest may apply when withdrawing cash, so make sure you only use your card for purchases.

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