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In short, the answer is no. But as with any credit card deal most ‘hidden’ charges or fees will appear depending upon how you use the card – in other words, they can often be avoided.
As far as the actual 0% purchase deal goes, there aren't any hidden charges or fees - unlike the majority of 0% balance transfer credit cards that now charge a transfer fee for the privilege of moving your balance onto the 0% rate.
0% purchase deals won't charge you a fee for making a purchase that you want to qualify for the 0% rate. Instead, all purchases made on the 0% purchase credit card will automatically - and without charge - be added to your account as a 0% balance.
What are the potential hidden charges?
However, where 0% purchase credit cards are concerned, any hidden charges you may incur are probably going to happen if you use the card for cash transactions, such as ATM withdrawals or buying foreign currency or traveller’s cheques.
The potential charges that you could incur on a 0% purchase credit card include:
- Cash transaction interest rates – will often be charged from the date of the cash transaction until repaid in full.
- Cash transaction handling fees – usually around 2% - 3% of the transaction amount.
- Balance transfer interest rates – If you transfer a balance to your 0% purchase credit card and the card does not offer a 0% balance transfer deal.
- Balance transfer handling fees – if the card charges a transfer fee and you move a balance to the card.
- Late or missed payment defaults - up to £12 per default
- Standard interest charges on your purchases if you have a purchase balance outstanding at the end of the 0% purchase period - or if you fail to make your minimum monthly repayments and the 0% rate is prematurely withdrawn.
These 'potential' charges can be avoided simply by limiting your 0% purchase credit card use to purchases, and of course, that you also pay at least the minimum required payment each month to retain the promotional 0% rate.
Aside from the interest rates and fees charged, another reason to be cautious of cash transactions is the allocation of payments clause listed in credit card terms & conditions.
This clause states the order in which payments made to your account will be applied to different rate balances. Usually this order will list cheaper – or 0% - balances first, with higher rate balances last.
What this means is that if you splash out on a large purchase to make use of your 0% purchase deal – but then you also withdraw £10 at an ATM machine – the £10 withdrawal will incur interest charges and you won’t be able to repay it until you’ve first repaid all your purchases.
The dos and don'ts of 0% purchase cards
When it comes to 0% purchase credit cards there are some very good deals to choose from, with a number of credit card companies offering impressive interest free periods, which means that you have even more time to pay off any balance that you accrue through making purchases on the credit card without being hit by interest charges.
You should repay the balance on your 0% purchase credit card within the interest free period, but if you do not manage it then you should ensure that you transfer any remaining balance onto a 0% balance transfer credit card before the interest free period runs out.
There are no hidden fees and charges to worry about with a 0% purchase credit card.
These cards are perfect for those that want to make purchases on the card, wish to spread the repayments, but want to avoid paying interest on their spending.
However, you should bear in mind that these cards should be used to make purchases only in order to benefit from the interest free features, otherwise you could find that you incur unexpected charges.
A 0% purchase credit card is not suitable for balance transfers, as you will not be charged 0% on transfers unless the card specifically states this. You should therefore avoid transferring balances on to your 0% purchase credit card.
You should also be mindful that you are not charged 0% interest on cash transactions, and in fact you will incur hefty fees and charges for cash transactions, which means that you should also avoid making withdrawals or purchases that are classed as cash transactions (such as online gambling, gift vouchers, bill payments) on your 0% purchase credit card.
The best way to use 0% purchase credit cards
The best way to use a 0% purchase credit card is simply to use it for purchases, always make at least the minimum monthly repayment, and budget your income so that you can repay your spending before the standard interest rate kicks in when the 0% period ends.
Pitfalls and t&c's aside, 0% purchase deals are really great – and when used wisely can really save you a lot of money for when you to buy now and pay later.
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