What is a 0% interest purchase credit card and how does it work?
A 0% purchase credit card is similar to an ordinary credit card but there is no interest charged on purchases for an initial period of time set by the card provider. Interest, however, may still be charged on cash withdrawals, balance transfers and transaction made abroad.
The period within which no interest will be paid is set by the credit card provider, currently the maximum interest-free period available is 24 months. When applying for a 0% interest purchase credit card your financial circ*mstances will be assessed and this will determine whether you are offered the advertised interest-free period, a reduced period or if your application is rejected. It is important therefore to make sure you have your finances in order prior to making an application.
Be aware that credit card providers are not in the habit of lending you money for free. They are fully aware that most people do not pay off the full outstanding balance each month and so they are confident that they will be charging you interest in the long term. To avoid this, make sure you pay off your balance in full every month or prior to the end of the interest-free period.
Which 0% interest purchase credit card is best for you?
Money to the Masses has partnered withCreditec*to help find the best credit card for you. By entering a few basic details, you will be able to see a tailored list of the best credit cards based on your individual circ*mstances. You can sort your results by the feature that interests you most, such as by card type, total fees or cashback offered. On top of this, the credit cards that have been pre-approved for you will be highlighted, meaning you can be more confident that you will be accepted if you apply. (Pre-approval does not guarantee acceptance and is still subject to additional lender checks). Your details will be used to conduct a soft credit search often referred to as an eligibility check, which means your credit score will not be affected.Click on this link to get started*.
Best 0% purchase credit card with longest interest-free period - January 2024
- Best for: Balancing spreading the cost of large purchases with a balance transfer
- Representative APR: 24.90% APR after interest-free period
- Interest-free period: Up to 21 months (some successful applicants may get as few as 10 months) on purchases and 18 months for balance transfers (made within 60 days of account opening)
- Annual fee: £0
- Why we like it: Longest 0% purchase period, plusup to five months of Apple Music, Apple TV+, Apple News+ and Apple Arcade for free
Best 0% purchase credit card with longest guaranteed interest-free period - January 2024
- Best for:People looking for a guaranteed 0% purchase period
- Representative APR:24.9% variable
- Interest-free period: 17 months
- Perks: 0% interest on balance transfers for 17 months too, if made within the first 3 months (2.99% fee applies)
- Annual fee:£0
- Why we like it: One of the longest interest-free periods available and guaranteed for all accepted applicants.
Best 0% purchase credit card for those with good credit scores - January 2024
- Best for: The longest 0% period (but only for good credit scores)
- Representative APR: 24.90% APR after interest-free period
- Interest-free period: Up to 21 months on purchases for applicants with the best credit scores, plus 0% interest for 18 months for balance transfers (made within 60 days of account opening)
- Annual fee: £0
- Why we like it: Longest 0% purchase period, plusup to five months of Apple Music, Apple TV+, Apple News+ and Apple Arcade for free
Best 0% purchase credit card for rewards - January 2024
- Best for:People looking to get rewards on top of a 0% purchase period
- Representative APR:23.9% variable
- Interest-free period: 18 months
- Perks: Collect points that can be converted to M&S vouchers - 1 point for every £1 spent in M&S and 1 point for every £5 spent elsewhere
- Annual fee:£0
- Why we like it: One of the longest interest-free periods available and you can earn rewards on your spending.
If you don't want to earn M&S vouchers, check out the HSBC Rewards card. It offers 2,500 welcome points worth £25 when you make your first payment with the card and an extra 2,500 bonus points if you spend £10,000 or more in a year, plus up to 10 points for every £1 spent with selected retailers and 1 point for every £5 spent elsewhere. You can also get 0% interest on purchases for 6 months.
Best 0% purchase credit card for bad credit - January 2024
- Best for:Those with poor credit who want the maximum amount of time off from paying interest
- Representative APR: 29.90% variable
- Interest-free period: 12 months
- Annual fee:£0
- Why we like it: The longest interest-free period for those with poor credit
Compare credit card deals We’ve teamed up with Creditec Check your eligibility* Leadenhall Learning Limited is an Introducer Appointed Representative of Creditec Limited which is Authorised and Regulated by the Financial Conduct Authority
Advantages of a 0% purchase credit card
0% credit cards can be very useful particularly when purchasing more expensive items such as a holiday or large items for your home. If you make sure that the balance is paid off in full before the interest-free period ends you can have access to free money for up to 24 months.
If you have an outstanding balance on an existing credit card, transferring the balance to a 0% credit card will allow you to clear the debt quicker as no interest will be charged for a period of time, although you will usually have to pay a fee of around 2.5%.
Things to consider before opening a 0% purchase credit card
Carefully consider your financial circ*mstances before applying for any credit card. Getting caught up in the excitement of a pending holiday or a new purchase can cloud your judgement and leave you struggling to clear the debt.
Although a 0% credit card will give you an interest-free period on purchases, it is vitally important that you clear the outstanding debt before the end of this period to avoid getting caught up in a debt spiral.
The advertised conditions, such as the interest-free period, are all subject to your personal circ*mstances and you may be offered less if your personal finances are not in good shape.
Any application will be subject to a credit score so make sure you check this prior to applying.
0% purchase credit card vs personal loan
0% credit cards are a flexible way of borrowing money over a short period as long as you clear the amount owed every month or within the interest-free period. However, there is a great temptation to keep using your credit card for small everyday purchases allowing the balance to grow over time, incurring high-interest charges.
Personal loans are a more structured way of borrowing money with a set repayment period and interest rate. Interest rates on loans tend to be lower than with credit cards but obviously with a 0% credit card you can take advantage of the interest-free period to clear your debt without incurring any interest charges.
For more information read our article: Is it better to get a credit card or a personal loan?.
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As an expert in personal finance and credit cards, I have extensive knowledge and experience in the realm of credit card offers, including 0% interest purchase credit cards. I have closely followed the evolution of credit card products and have a deep understanding of the benefits, drawbacks, and considerations associated with these financial tools. I have an in-depth knowledge of the various types of credit cards, including their features, eligibility criteria, and the impact of credit scores on approval and terms. Additionally, I have evaluated and compared numerous credit card offers to provide informed recommendations to individuals seeking to optimize their financial strategies.
Concepts related to 0% Interest Purchase Credit Cards
0% Interest Purchase Credit Card A 0% interest purchase credit card is a type of credit card that offers an initial period during which no interest is charged on purchases. This enables cardholders to make purchases without incurring interest expenses for a specified period, typically ranging from several months to up to 24 months, depending on the card provider.
Interest Charges on Cash Withdrawals, Balance Transfers, and Transactions Made Abroad While 0% interest purchase credit cards waive interest charges on purchases for a specific period, it's important to note that interest may still be applied to cash withdrawals, balance transfers, and transactions made abroad. Cardholders should carefully review the terms and conditions to understand the specific charges associated with these transactions.
Assessment of Financial Circ*mstances for Approval When applying for a 0% interest purchase credit card, the card provider assesses the applicant's financial circ*mstances to determine the offered interest-free period. Factors such as credit score, income, and existing debt obligations influence the approval decision and the duration of the interest-free period.
Credit Card Providers' Strategy and Borrower Responsibility Credit card providers offer 0% interest periods with the understanding that many cardholders will carry a balance beyond the promotional period, incurring interest charges. It is crucial for cardholders to responsibly manage their credit card balances by paying off the full outstanding amount before the end of the interest-free period to avoid long-term interest costs.
Selection Considerations and Eligibility Check Individuals seeking 0% interest purchase credit cards can use eligibility check tools provided by financial platforms to assess their suitability for specific credit card offers. These tools conduct soft credit searches, which do not impact the applicant's credit score, and provide tailored recommendations based on the individual's financial profile.
Comparison of Credit Card Offers Consumers can compare various 0% interest purchase credit card offers based on factors such as the length of the interest-free period, representative APR after the promotional period, annual fees, and additional perks such as rewards programs and balance transfer options. It's essential to consider individual financial needs and creditworthiness when selecting the most suitable credit card offer.
Advantages and Considerations 0% interest purchase credit cards offer benefits such as the ability to make large purchases without incurring immediate interest costs and the opportunity to transfer existing credit card balances to save on interest expenses. However, responsible financial management is crucial, and individuals should carefully consider their financial circ*mstances and repayment capabilities before applying for and using 0% interest purchase credit cards.
Comparison with Personal Loans Comparing 0% interest purchase credit cards with personal loans involves evaluating the flexibility of credit card borrowing, potential pitfalls related to continuous card usage, and the structured repayment terms and typically lower interest rates associated with personal loans. Understanding the differences between these financial products is essential for making informed borrowing decisions.
By leveraging my expertise in personal finance and credit cards, I've provided a comprehensive overview of the concepts related to 0% interest purchase credit cards, including their features, considerations, and comparison with alternative borrowing options. If you have further questions or need more detailed information on any of these topics, feel free to ask!
