0% Purchase Credit Cards

How to choose a 0% purchase credit card...

With the unyielding growth of consumerism, 0% offers are becoming increasingly popular with a swarm of credit cards to choose from.

With so many different card companies offering such a range of options it is easy to get confused. Fortunately Choosemoney.co.uk can guide you safely through the bustling marketplace of 0% purchase credit cards.

These cards are good for:

0% purchase credit cards are essentially useful for one thing and that's spending. But, of course, you can spend in different ways.

- One off large purchases
This is what 0% purchase credit cards do best. They can be viewed as a short-term, interest free loan. Instead of saving up the money before hand, you can simply buy what you need and then pay it back incrementally over the coming months.

If you plan on doing this though, you should ensure that...

1. The item(s) you buy are not so extravagant that you will be completely crippled by the repayments.


2. That you pay off the cost of your purchase(s) before the introductory period expires. If you don't, the standard interest rate will be high enough to make you wish you had the patience to just save up.
   
   and...


3. You make the compulsory monthly minimum payments. Interest free does not mean payment free!

- Continuous spending
Perhaps you have some critical months ahead - Birthdays, Christmas, a holiday etc. 0% purchase rate credit cards can be a great way to artificially boost your income for a spell that you might not be able to afford. However, it is all to easy for this 'spell' to drift on indefinitely, so make sure you only use the card for the extravagances you cant afford and be sure you pay back your spending before the introductory period runs out.

These cards are unsuitable for:

- The undisciplined
Ironically these cards tend to attract the exact type of people who should avoid them. If you would rather take out a credit card than save up, then you already have a predilection towards impatience.

If you are a shopaholic with a tendency to miss repayments and run up large balances, then these cards would probably be best avoided.

Look for:

Clearly the obvious and most important thing to consider is the length of the introductory 0% purchase period. But in addition to this, there are a few other incentives to be mindful of.

- The standard APR
Hopefully by the time the introductory interest free period expires your balance will display a pound sign followed by a big fat 0, but if things don't go as planned then you may have to ride out a few months at the standard rate, so it's important to make sure that it isn't extortionate.

- Added perks
Due to the high level of competition in this area, companies will sometimes offer 'extras' to try and win your custom. Whilst it must be stressed that these 'extras' are supplementary to the main requirements of the card, if you are stuck deciding between two seemingly identical cards, the one offering reward points could be bonus enough to swing it.

Watch out for:

- Cash transactions
No 0% credit card available will include cash transactions as part of the deal. However, you must be aware that cash transactions are not solely limited to taking money from ATM's, they also include deceptive methods such as ‘cash back’ and foreign currency purchase, both of which can be easy to slip up on.

- Balance transfer tricks
Ensure that if you plan to transfer a balance to a 0% purchase credit card, you choose a card that offers 0% on the balance transfer and purchases for an equal amount of time.

If a card offers a introductory rate of 10 months on balance transfers, but only 6 on purchases you have to view it as offering 6 months on both, as a result of the allocation of payments rule that credit card companies use.

Payments are taken from your account according to the amount of interest they accumulate starting with the lowest. In other words, you will have to pay off the cheap balance transfer debt before the expensive spending debt.

See credit cards that are suitable to use for both transferring a balance and purchase spending.

Don't forget:

- Fees and charges
Be aware that any fees or charges you incur will not fall under the safety net of the 0% purchase period. i.e. you will have to pay them at the standard interest rate.

- To make your monthly repayments and stay within your limits
If you don't pay back the minimum required each month - usually the lesser of £5 or 5% of the total balance - or if you spend more than your credit limit you will lose your interest free period for good.

- When your introductory period expires
After 10 months of spending freely it's easy to forget that the 0% bubble will eventually burst. Instead of receiving a shock statement at the end of the offer, put countdowns at intervals throughout your diary so that you can plan and be prepared for when the day arrives.

Compare 0% purchase credit cards