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0% purchase credit cards offer an interest rate of 0% on purchase balances added to the credit card during the introductory period.
However, credit cards classify different types of card use into different transactions – and different account balances – so not all transactions are classified as purchases and it’s these that won’t be included in the 0% purchase deal.
Purchase transactions – that will be included in the 0% purchase offer – include buying goods or services from retailers or companies.
Transactions not included in the 0% purchase include:
- ATM withdrawals
- Getting 'cash back' at the supermarket – or any retail outlet or bank
- Buying foreign currency or traveller’s cheques
- Gambling transactions – including any purchase made at a gambling establishment, e.g. a casino.
- Buying shopping or money vouchers
- Bill payments
- Money transfers
- Balance transfers (unless the card also offers a 0% balance transfer deal)
- Interest charges
- Fees and charges
0% purchase deals
A 0% purchase credit card is a great financial tool for those that wish to spread the cost of their purchases without having to pay any interest on their spending.
If you are planning a larger purchase such as a holiday or new equipment for your home, these cards can prove invaluable as you can make your purchase, repay the money that you spend over an extended period, and still avoid paying any interest on your borrowing.
Making the most of your 0% purchase credit card
A 0% purchase credit card can prove invaluable for those that want to spread their repayments without having to pay interest, but in order to benefit you must be careful when using these cards.
Firstly, you should make sure that you repay the balance within the specified interest free period, otherwise you could end up paying hefty amount of interest on any remaining balance, which could quickly counteract the benefits of the interest free period that you have enjoyed.
Secondly, and very importantly, you should remember that these cards are meant to be used for purchases only, and that there are a number of transaction types that are not included as part of the 0% interest deal.
Cash transactions, for instance, are not interest free and therefore you will be charged interest on these. Cash transactions include cash withdrawals, bill payments, online gambling, purchase of gift cards and vouchers, and transfer of money. Interest charges also continue to accrue interest, and this makes cash transactions even more costly.
If you are charged any late payments fees or penalties on your credit card these will not be part of the 0% interest deal, and you will be charged interest on these in the usual way, so it is important to repay your balance responsibly and sensibly to avoid such charges.
You should also avoid transferring balance on to your 0% purchase credit card, as these are also not part of the 0% interest deal unless otherwise specified (you can get cards that offer 0% on both purchases and balance transfers or a seperate 0% balance transfer credit card).
If your card offers 0% on purchases only, then you should ensure that it is used only for purchases and not for cash transactions, balance transfers, etc. This way you can make the most of this type of deal, and you can save a bundle on interest payments whilst still enjoying the ease and convenience of spending by credit card.
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