0% Purchase Credit Cards

What are 0% purchase credit cards?

As befits their name, 0% purchase credit cards give you the ability to spend money on credit while paying no interest for the length of the promotional period. This is known as an introductory offer or period.

The introductory period usually lasts between six and nine months, but occasionally up to 12-15 months depending on your lender. Following the introductory period, the card reverts to the standard credit card interest rate (between 13-21%).

Essentially, 0% purchase cards work in a similar manner to interest-free credit cards. They are well suited for making larger one-off purchases during the introductory offer, as they save you money on interest.

What should I consider before I get a 0% purchase card?

When you’re comparing 0% purchase credit cards, you need to give some thought to the following factors in order to find the right card for your needs:

• The length of the introductory 0% interest term. Typically, the longer the introductory offer, the more you can save and the easier it will be for you to repay your credit card debt without having to pay any interest.
• You will need to budget your repayments in advance or you could end up with an outstanding balance after the introductory period ends, which typically will incur a hefty interest surcharge.
• Annual fee. This is something to look out for, as most 0% purchase credit cards charge an annual fee. Before you compare 0% purchase cards, consider the offered benefits and how much you’ll be able to save during the 0% period.
• Revert rate. The interest rate that your card will revert to upon the end of the introductory period. If you don’t pay off any remaining debt on your card during the introductory period, the bank will charge you a standard purchase rate.
• Additional benefits or extras. Depending on your 0% purchase card provider, you can claim reward points from a range of retailers, supermarkets and petrol stations like you would with a rewards card.
• Terms and conditions. Before you compare 0% purchase cards, make a habit of perusing the fine print to see if there any extra charges, clauses and potential penalties that could negate your offer.

Mistakes to avoid when using a 0% purchase credit card

Much like with the majority of interest-free credit cards, you will need to be diligent with your payments. Otherwise if you pay late, you’ll owe interest on your purchases.

What many customers also overlook is the credit card revert rate, which can come as a nasty shock if you continue using your 0% purchase card past the introductory period.

A common mistake for 0% purchase credit card holders is withdrawing cash from an ATM using their credit card. This is called a cash advance and you get charged interest on this money right away.

0% purchase credit cards can be of great benefit if you’re using them in a smart way and are diligent with your repayments. When you compare 0% purchase cards, keep in mind all the pros and cons and plan your purchases well ahead to make the most of your introductory offer.