How Do 0% Purchase Credit Cards Work?
0% Purchase Best Buys
0% Purchase FAQ's
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0% purchase credit cards are a great way to save a few quid if you intend to use a credit card for any upcoming large purchases, or even if you just need to spread the cost of a long shopping list.
The idea is simple - you will not be charged any interest on your purchases with the credit card for so long as the offer lasts.
Getting 0% interest on purchases won't last forever though - such deals are introductory offers, and after a set period of time you will have to go back to paying interest on your purchases as per normal.
So how long will I get 0% interest on my purchases for?
The duration of such offers varies greatly. If you're lucky you might find an offer that gives you zero percent interest on your purchases for a whole year (see HSBC credit card). Unfortunately though, most offers will be shorter, and often last for just three months.
But the duration of the offer is not the only factor to take into consideration. There are other important things to consider.
This particularly applies to those who are signing up to a 0% balance transfer deal to try to reduce or manage their current credit card debt.
0% balance transfer offers often have a 0% purchase offer thrown in, and it is important for such people that the duration of the 0% purchases and the 0% balance transfer offers are of the same length. If not, they should typically not use the credit card for purchases.
If however you simply want the card for your routinely spending requirements, the duration of the 0% purchases rate is of primary importance. Compare 0% purchase credit cards and see who is currently offering the longest 0% periods.
What happens at the end of the 0% purchase period?
Whatever the outstanding balance on the credit card is, you will begin paying interest on it at the usual rate. So if you bought something with the credit card during the 0% offer, but haven't yet paid it of, you will begin paying interest on that amount from the time the 0% period ends.
And the interest on such credit cards can be high - usually around 15.9% p.a., so it's important that you clear your balance before the 0% interest offer ends.
Are all purchases included in the 0% deal?
Any time you use the card to pay for goods or services, from retailers, providers or companies, you will not pay any interest on that purchase.
Whether you do so over the phone, on the high street, or on the internet (but beware - paying for gambling, for example internet poker, will typically be considered a cash transaction and will be subject to charges) will not matter.
What is not included in the 0% purchase offer?
- Cash Transactions
Getting money from the ATM with your credit card will be subject to fees and interest.
As will getting 'cash back' at the check-out, buying foreign currency, travellers cheques, money transfers and gambling.
Sometimes even buying food or drinks at a gambling establishment can be construed as a 'cash transaction' and be subject to interest and fees. If you're going to the casino, leave the 0% purchase credit card at home.
Also be weary of shopping vouchers - purchasing these is often considered a form of 'cash' transaction and as such won't be included in the 0% rate.
- Balance Transfers
0% purchase credit cards often have a 0% balance transfer offer bundled with it.
If you are intending to move a balance and spend on the 0% offer, it's much better to choose a card that offers a 0% rate on both transferred balances and on new purchases for the same length of time.
- Fees etc.
Fees and charges your account is subject to will not avail of 0% interest. These are not considered purchases, and you will pay interest on them.
Such charges might include handling fees for cash transactions, interest accruing from the same, to name but two.
What you need to be wary of, when you are also transferring an existing credit card debt
It's like this: be careful how you use a 0% purchase credit card, which is also acting as a 0% balance transfer card, if you are moving debt from an old card to the new one.
If the 0% purchase period is shorter than the 0% balance period (on the balance/debt you transferred), then you should probably not use the card for new purchases.
This is because with most credit cards, you have to pay off the debt that is accruing the lowest interest FIRST, before you can pay off the debt that is accruing the higher levels of interest.
So when your 0% purchases offer runs out, you will not be able to pay off this debt, until you have paid off the old debt that you moved onto the 0% purchases/0% balance transfers credit card.
For more information on this issue, visit our 0% balance transfer and purchase credit card page to see the details of which credit cards are suitable for both transferring to and spending on.
Such credit cards are relatively few - it's often better simply to have one 0% balance transfer credit card to move existing debt onto, and a different 0% purchase credit card with which to purchase items and services - namely so you can benefit from the longest 0% deals available.
Compare 0% purchase credit cards
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