What is a 0% Purchase Credit Card?
Written by Robert Bester, Consumer Finance Expert Robert has been a writer for six years, specialising in consumer finance and the UK lending market. Concentrating on consumer credit products, Robert writes informative articles that help customers manage their personal finances efficiently.
30th November 2020
4 minute read
A 0% interest purchase credit card will allow you to spend for a limited amount of time without accumulating any interest on top of the outstanding balance.
This is preferable over most standard credit cards, as they will always add interest at the end of the month, meaning you will have to spend a percentage on top of your balance in order to borrow money in the first place.
To find out how you can make the most of a 0% interest purchase credit card, keep reading our short guide. It means that rather than having to sell off your priceless collection of costume jewellery to fund a replacement Guru robe in the right shade of purple, you can simply use your card and make monthly repayments instead.
What are the benefits of a 0% purchase credit card?
A 0% purchase credit card gives you the option of spending without accumulating large amounts of interest, and with a bit of effective money management you can end up borrowing money for free.
You will be expected to make a minimum payment each month, but the best plan is always to overpay, meaning you can pay off the entire amount within your promotional period, and not pay any interest at all.
This promotion can sometimes be combined with a 0% balance transfer offer, meaning that you will also be able to transfer money from an existing credit or debit card. This can be to consolidate debt into one place or to simply pay off an old credit card that is accumulating interest.
Am I eligible for a 0% purchase card?
There are many different purchase cards available, with varying promotional periods that can last from a few months all the way up to a few years. Like all credit cards or personal loans, your eligibility is usually based on whether you have a good enough credit score. In the same way, you might be eligible for a purchase card but could have the offer adjusted depending on your financial history.
Put simply, the higher your credit score, the more likely you are to have a longer interest-free period, as you are considered more trustworthy as a borrower.
What to consider when getting a 0% purchase card
If you’ve started to compare different purchase cards you might have already noticed a few common characteristics. If not, we’ve got a list of things you should be looking for:
- Purchase period – this is possibly the biggest difference between purchase cards, in that it shows how long you will be able to spend for without accumulating interest. Even though a longer promo period can seem advantageous, it can cause problems if you forget about the end date. It’s important to budget in the long term to make sure you can pay off the full balance before the interest-free period finishes
- APR – this is what you can expect to pay on top of your outstanding balance, but only once the interest-free period has finished
- Annual fee – with some gold & premium credit cards you can expect to pay an annual fee, but with most purchase cards, this is free. Read more about other credit card fees and charges here
- Credit rating requirements – this should indicate how good your credit rating needs to be for you to apply. Usually with a purchase card it has to be ‘good’ at least
- Other benefits – you might find that your 0% purchase card has additional perks too, including 0% on balance transfers, cashback for a certain period or no fees to pay whilst spending abroad
The best way to find out all the terms of your purchase card to see if it’s the right one for you is to read the summary box document that you can download once you’ve clicked through to the provider’s page. Find out what you should be looking for in your summary box document here.
Choosing the best purchase credit card for you
When you start looking for a 0% purchase credit card, you’ll naturally be drawn towards the one with the longest interest-free period, but this might not always be the right one for you, especially if you only want to borrow for a short amount of time. Consider the following points when you get to picking a card:
- How long would you like to borrow for? – as mentioned above, the longest interest-free period isn’t always the best, it simply gives you a bit more breathing room with your spending and can be risky if you aren’t sensible with your finances
- How much do you want to spend/borrow? – do you already have items in mind you would like to purchase? If so, add up the total amount and have this figure in your head when looking. Unfortunately, you won’t get a confirmed amount until your application is approved, but keeping that figure in mind will help you manage your spending in the long term
- How much can you afford to pay back every month? – once you’ve thought about the length of borrowing and how much, the final important question is how much you can comfortably afford to part with each month. With your total amount and your length of borrowing, this should give you a good indication of what purchase card will fit your requirements
Getting a purchase credit card solves a financial problem by spreading the cost of your spending, but you might have more important priorities. If you already have debts you’d like to deal with, maybe a balance transfer card would help? If you need to improve your credit score, try a credit builder card instead. Want to spend abroad? Get a travel credit card to avoid additional fees.
Compare 0% purchase credit cards
Are you ready to compare 0% interest purchase cards for yourself? A good way to start is to check your eligibility using our free moneymatcher tool. With just a few personal details you could find the credit card for you.
You can also find more relevant information by reading the following articles: