What is a 0% interest purchase credit card and how does it work?
A 0% purchase credit card is similar to an ordinary credit card but there is no interest charged on purchases for an initial period of time set by the card provider. Interest, however, may still be charged on cash withdrawals, balance transfers and transaction made abroad.
The period within which no interest will be paid is set by the credit card provider, currently the maximum interest-free period available is 20 months. When applying for a 0% interest purchase credit card your financial circumstances will be assessed and this will determine whether you are offered the advertised interest-free period, a reduced period or if your application is rejected. It is important therefore to make sure you have your finances in order prior to making an application.
Be aware that credit card providers are not in the habit of lending you money for free. They are fully aware that most people do not pay off the full outstanding balance each month and so they are confident that they will be charging you interest in the long term. To avoid this, make sure you pay off your balance in full every month or prior to the end of the interest-free period.
What are the best 0% interest purchase credit cards? (January 2021)
When trying to access which is the best 0% interest purchase credit cards there are three areas you need to consider.
- The length of the interest-free period
- The potential interest rate at the end of this period
- Whether there are any account charges levied
Having completed a full review of the best 0% purchase credit cards, here are my top 5 for January 2021:
| Credit card Provider | Interest-free period (months) | APR (after interest-free period) | Account fee | Rewards |
Minimum Payment
|
| M&S | Up to 20 months | 19.90% | £0 | 1p per £1 spent at M&S. Points can be redeemed four times per year |
Greater of 1% of balance plus interest, 2.5% or £5
|
| Sainsbury's Bank Dual Offer credit card | Up to 20 months* | 20.90% to 28.95% * | £0 | Collect Nectar points on purchases (you must be a Nectar cardmember) |
Greater of £5 or 1% of balance (including fees)
|
| TSB | Up to 20 months | 19.95% | £0 | N/A | Greater of £5 or 1% of balance (including fees) |
| Tesco Bank Purchases credit card | Up to 18 months* | 19.9% to 26.90% * | £0 | Collect Tesco Clubcard points on purchases |
Greater of £25 or 1% of balance (including fees)
|
| Barclaycard Platinum Purchase credit card | Up to 18 months* | 21.90% to 29.90%* | £0 | Savings on live events with Barclaycard Entertainment |
Greater of £5 or 2.5% of balance (including fees)
|
*dependent on the personal circumstances of the applicant
- 0% on new purchases for up to 20 months, depending on your circumstances.
- 0% interest for up to 20 months on balance transfers made within the first 90 days of account opening
- 2.90% fee for balance transfers
- Interest rate of 19.90% after interest-free period
- 0% interest for up to 20 months from the date of the account opening, depending on your personal circumstances. Interest rate currently 20.90% to 28.95% APR depending on your personal circumstances.
- 0% interest for up 20 months on balance transfer, interest currently 20.90% to 28.95% APR depending on your personal circumstances.
- No interest-free period for cash advances, interest rate currently 25.95% to 28.95% APR depending on your personal circumstances.
- No annual fee
- No interest will be charged on new purchases if you pay the statement balance in full and before the end of the offer period. If not repaid in full, interest will be charged from the date of purchase until date of full repayment.
- Collect 2 Nectar points on all purchases at Sainsbury's over £1 and 1 Nectar point on purchases over £5 elsewhere (you must have been a Nectar cardmember for at least 6 months)
- An introductory offer of up to 7,500 bonus Nectar points in your first two months (collect 750 points on purchases over £35)
- 0% interest on new purchases for a maximum of 20 months depending on personal circumstances
- 0% only applies to purchases made in the first 90 days of account opening.
- 0% interest for up to 20 months on balance transfers (made within the first 90 days of account opening), interest currently 19.95% APR after interest-free period depending on the personal circumstances of the applicant.
- No annual fee
- No interest will be charged on new purchases if you pay the statement balance in full and before the end of the offer period. If not repaid in full, interest will be charged from the date of purchase until date of full repayment.
- 0% interest for up to 18 months from the date account is opened depending on your individual circumstances. Interest rate currently 19.90% to 26.90% APR after the interest-free period depending on your individual circumstances.
- No interest-free period for cash advances, interest rate currently 24.90% to 32.90% APR depending on your personal circumstances.
- No annual fee
- Need to have an annual income of £5,000
- No interest will be charged on new purchases if you pay the statement balance in full and before the end of the offer period. If the account is not fully cleared, interest will be charged on the average daily balance until full payment is made.
- If you default on payments in the introductory period a fee of £12 you will lose the benefit of the introductory rate and your account will incur interest at the current rate on the outstanding balance.
- Collect Tesco Clubcard points on purchases
- 0% interest for up to 18 months from the date account is opened, depending on your personal circumstances. Interest rate currently 21.90% to 29.90% APR after interest-free period depending on your personal circumstances.
- 0% interest on balance transfers made within 60 days of account opening, interest rate currently 21.90% to 29.90% APR after interest-free period depending on your personal circumstances (a 2.7% transfer fee applies)
- No interest-free period for cash advances, interest rate currently 24.90% APR
- No annual fee
- No interest will be charged on new purchases if you pay the statement balance in full and before the end of the offer period. If not repaid in full, interest will be charged from the date of purchase until date of full repayment.
- Benefit from savings on live events with Barclaycard Entertainment.
Advantages of a 0% purchase credit card
0% credit cards can be very useful particularly when purchasing more expensive items such as a holiday or large items for your home. If you make sure that the balance is paid off in full before the interest-free period ends you can have access to free money for up to 20 months.
If you have an outstanding balance on an existing credit card, transferring the balance to a 0% credit card will allow you to clear the debt quicker as no interest will be charged for a period of time, although you will usually have to pay a fee of around 2.5%.
Things to consider before opening a 0% purchase credit card
Carefully consider your financial circumstances before applying for any credit card. Getting caught up in the excitement of a pending holiday or a new purchase can cloud your judgement and leave you struggling to clear the debt.
Although a 0% credit card will give you an interest-free period on purchases, it is vitally important that you clear the outstanding debt before the end of this period to avoid getting caught up in a debt spiral.
The advertised conditions, such as the interest-free period, are all subject to your personal circumstances and you may be offered less if your personal finances are not in good shape.
Any application will be subject to a credit score so make sure you check this prior to applying.
0% purchase credit card vs personal loan
0% credit cards are a flexible way of borrowing money over a short period as long as you clear the amount owed every month or within the interest-free period. However, there is a great temptation to keep using your credit card for small everyday purchases allowing the balance to grow over time, incurring high-interest charges.
Personal loans are a more structured way of borrowing money with a set repayment period and interest rate. Interest rates on loans tend to be lower than with credit cards but obviously with a 0% credit card you can take advantage of the interest-free period to clear your debt without incurring any interest charges.
For more information read our article: Is it better to get a credit card or a personal loan?
0% purchase credit card FAQs
How much can I save using a 0% purchase credit card?
How much you could save with a 0% credit card will depend on how much you borrow but here is an example showing the potential savings.
| 0% credit card | Standard credit card | |
| Interest rate | 0% | 18.90% |
| Amount borrowed | £1,000 | £1,000 |
| Fixed monthly repayment | £50 | £50 |
| Repayment term | 20 months | 24 months |
| Interest paid | NIL | £190 |
Can I transfer a loan onto a 0% purchase card?
It is unlikely that you will be able to transfer a loan directly to a credit card. However, it may be possible to pay off the balance of a loan with a credit card but you should be aware of the following issues.
- Is there a redemption penalty for paying off the loan early
- Are you be able to clear the balance on the credit card before the interest-free period expires, if not you may be incurring a higher interest rate than on the original loan
How do I pay off a 0% credit card?
As with any debt, it is advisable to pay it off as quickly as possible. If you can't pay the balance off every month always make sure you pay more than the minimum amount. It's advisable to pay a fixed amount every month as this will reduce the debt quicker.
What happens when the interest-free period ends?
At the end of the interest-free period, the interest rate charged will be at the current rate for the card. This may be higher or lower than the rate advertised on application.
Can I use a 0% credit card for balance transfers?
Most 0% credit cards allow balance transfers but there may be certain restrictions so make sure you check the T&Cs fully.
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