16 min Read
13 Jan 2020

Written by Rachel

Rachel Wait is a personal finance journalist who has vast experience writing about money issues, property, insurance and consumer affairs. She has written for the likes of Shares Magazine, loveMONEY, MoneySuperMarket and Mail on Sunday.

More about Rachel

Which credit card has the longest interest-free period?

Credit card interest free periodUsed correctly, a credit card can be a handy tool to help manage your finances, but with so many different types of credit card it is important to choose the right one for your needs. If you are looking to reduce the amount of interest you are currently paying on existing cards, or you are planning a large purchase, an interest-free or 0% APR credit card could be a good option.

APR stands for annual percentage rate and a 0% APR credit card allows you to avoid paying interest on balance transfers or purchases or both for a set amount of time. We explain APR in more detail in our article 'Interest rates explained'.

What is the difference between a 0% purchase and 0% balance transfer credit card?

A 0% purchase credit card allows you to spread the cost of your spending interest-free over a set number of months. This can provide some breathing space if you have a large purchase to pay for, such as a holiday. You can pay off the amount you owe in monthly instalments without paying interest on top. Once the 0% deal ends you will start paying interest, unless you have cleared your balance. Interest may also still be charged on cash withdrawals, balance transfers and transactions made abroad.

A 0% balance transfer credit card, on the other hand, allows you to transfer one or more credit card balances across and avoid paying interest on your new card for a number of months. If you were paying interest on your old balances, this process can save you a decent sum of money. The downside is you will often have to pay a transfer fee which is added to your new balance. Some credit cards offer shorter 0% periods in return for a lower transfer fee, so it can be worth weighing up how long you need to pay off your debt to see which is the cheaper option for you.

Once the 0% deal ends, you will start paying interest on your new card, unless you have paid off the balance in full or you carry out another balance transfer. Many balance transfer 0% deals also only apply to transfers carried out in a certain period of time, ie. 60 days, so check this before you apply. It is also best to avoid spending on a balance transfer card, although some credit card companies offer a dual credit card with a 0% interest rate for both balance transfers and spending.

Purchase credit cards

A 0% purchase credit card charges no interest on new spending for an initial period of time. But how do you know if a 0% purchase card is right for you? If you are planning a big purchase and cannot afford to pay for it upfront, a 0% purchase card allows you to spread your payments over several months, without worrying about interest building up.

If you are thinking of applying for a 0% purchase card, be aware that the best deals are only offered to those borrowers who have excellent credit ratings. If your credit rating is below par, you may not be offered the interest-free period advertised, or your application could be rejected. It is therefore worth checking your finances are in order before you apply. If your application is accepted, make sure you keep up with your monthly repayments and aim to clear your balance before the end of the interest-free deal.

You can find more information on purchase credit cards in our article 'Compare the best 0% purchase credit cards'.

Compare the best 0% purchase credit cards

The table below shows the top three deals for 0% purchase credit cards.

Provider Interest-free period APR (after interest-free period) Rewards Minimum repayment
MBNA Up to 26 months* 20.9% or 27.9%* None Greater of £25 or 1% of balance
Barclaycard Up to 25 months* 21.9% to 29.9%* Savings on live events with Barclaycard Entertainment Greater of £5 or 2.25% of balance
Sainsbury’s Bank Up to 22 months* 20.9% to 28.9%* Collect Nectar points on purchases Greater of £5 or 2.25% of balance

* Dependent on personal circumstances of the applicant.

  MBNA

  • 0% on new purchases for 26 months or 15 months, depending on your circumstances
  • 0% only applies to purchases made in the first 60 days of account opening
  • 0% for 26 months or 15 months on balance transfers made in the first 60 days, depending on your circumstances
  • 2.89% or 3% fee for balance transfers
  • Interest rate of 20.9% or 27.9% APR after interest-free period, depending on your personal circumstances.

 

Barclaycard Barclaycard

  • 0% on new purchases for up to 25 months, depending on your circumstances. You may be offered up to 12 months
  • 0% interest for up to 25 months on balance transfers made within the first 60 days of account opening
  • 2.7% fee for balance transfers
  • Benefit from savings on live events with Barclaycard Entertainment
  • Interest rate of 21.9% or 24.9% or 29.9% after interest-free period, depending on your personal circumstances

 

Sainsbury’s Bank

  • 0% on new purchases for up to 22 months. Depending on your circumstances, you may be offered 18 or 14 months
  • 0% interest on balance transfers for up to 22 months. Depending on your circumstances, you may be offered 18 or 14 months
  • 3% fee (minimum £3) for balance transfers
  • Collect Nectar points as you spend
  • Interest rate of 20.9%, 22.9% or 28.9% APR after interest-free period, depending on your personal circumstances

Best 0% balance transfer cards

A 0% balance transfer credit card allows you to move existing card balances across and avoid paying interest for a set time. But how do you know if a 0% balance transfer card is right for you? If you are paying interest on existing credit card debt, you can save money on interest and pay off your balance more quickly if you use a 0% balance transfer card.

However, as with 0% purchase cards, only those with good credit ratings will be offered the best balance transfer deals. If your credit rating is low, you may be offered a shorter interest-free period, a higher transfer fee, or your application could be rejected.

For more information on balance transfer cards take a look at our articles:

Best 0% balance transfer credit card deals
How to do a credit card balance transfer in 5 minutes
How to clear credit card debt with a 0% balance transfer

Compare the best 0% balance transfer credit cards

The table below shows our top five deals on 0% balance transfer cards:

Provider Interest-free period Transfer fee APR (after interest-free period) Small print Minimum repayment
MBNA Up to 29 months* 2.75%* 20.9% or 27.9%* Transfers should be made in the first 60 days Greater of £25 or 1% of balance
Sainsbury’s Bank Up to 29 months* 3%, reduced to 2.74% by refund 19.9% to 28.9%* Transfers can be made up to 29 months but could be reduced to 25 or 21 months Greater of £5 or 2.25% of balance
Virgin Money 29 months 3% 21.90% Transfers should be made in the first 60 days Greater of £25 or 1% of balance
Barclaycard Up to 28 months* 1.75% 21.9% to 29.9%* Transfers should be made in the first 60 days Greater of £5 or 2.25% of balance
Natwest / RBS 20 months 0% 19.9% to 29.9%* Transfers should be made in the first three months. Need to be an existing NatWest / RBS customer Greater of £5 or 1% of balance

* Dependent on personal circumstances of the applicant.

MBNA credit card MBNA

  • 0% on balance transfers for 29 months or 16 months, depending on your circumstances
  • 0% only applies to balance transfers made in the first 60 days of account opening
  • 2.75% or 3.49% fee for transfers made within the first 60 days
  • Interest rate of 20.9% or 27.9% APR after interest-free period, depending on your personal circumstances.

 

Sainsbury credit card Sainsbury’s Bank

  • 0% on balance transfers for up to 29 months. Depending on your circumstances, you may be offered 25 or 21 months
  • 2.74% fee on transfers made within three months of account opening (3% initial fee reduced by refund, £3 minimum)
  • Interest rate of 19.9%, 22.9% or 28.9% APR after interest-free period, depending on your personal circumstances.

 

Virgin Money

  • 0% on balance transfers for 29 months
  • 0% only applies to balance transfers made in the first 60 days of account opening
  • 3% fee for transfers made within the first 60 days
  • Interest rate of 21.9% APR after interest-free period

 

Barclaycard Barclaycard

  • 0% on balance transfers for up to 28 months, depending on your personal circumstances. You may be offered up to 14 months
  • 0% only applies to balance transfers made in the first 60 days of account opening
    1.75% fee for transfers made within the first 60 days
  • £20 cashback when you transfer a balance of £2,500 or more within 60 days of account opening. Ends 5 February 2020
  • Interest rate of 21.9% or 24.9% or 29.9% APR, depending on your personal circumstances

 

Natwest Credit Card NatWest / RBS

  • 0% on balance transfers for 20 months
  • 0% only applies to balance transfers made in the first three months
  • 0% fee on balance transfers
  • Each transfer must be at least £100
  • Interest rate of 19.9% or 25.9% or 29.9% APR after interest-free period, depending on your circumstances
  • Available to customers who have a NatWest / RBS current account, savings account, credit card or mortgage

The card that’s best for you will depend on the size of your balance and how quickly you can pay it off. If you think you can clear your balance within 20 months (do the maths to check) and you’re an existing NatWest customer, the NatWest credit card will work out cheaper than the other cards above as there’s no fee to pay.

How much money can I save with interest-free credit cards?

To work out how much you could potentially save with an interest-free credit card, let’s imagine you have a debt of £3,000 on an existing card charging 19.9% APR.

The table below shows how much it would cost by leaving the debt on your existing card, versus transferring it to a 0% balance transfer card. We’ve used two different balance transfer cards with different fee amounts. We used the Money Advice Service calculator to work this out.

Comparing a 19.9% APR credit card with ones that charge 0% - How much can you save?

Card Interest rate Fee (if applicable) Monthly payment Total cost in interest and fees Total saving vs standard card Time taken to pay off
Existing standard card 19.90% n/a £150 £605 n/a 25 months
Virgin Money 0% balance transfer card 0% for 29 months 3% (£90 on a £3,000 transfer) £150 £90 £515 21 months
NatWest 0% balance transfer card 0% for 20 months 0% £150 £0 £605 20 months

In the example above, the NatWest card saves you the most money, but if you have a larger balance and you need longer to pay it off, the Virgin card could be a better choice.

Can I get a 0% credit card?

If you want to know how to improve your chances of getting a 0% credit card, the key is having a good credit score. There are a number of steps you can take to improve your credit score, including:

  • Registering on the electoral roll - this confirms to lenders you live where you say you do
  • Checking your credit file regularly and correcting any mistakes
  • Paying your bills on time - it is a good idea to set up a direct debit for regular payments
  • Spacing out applications for credit - too many applications in a short amount of time can make you look desperate for credit
  • Considering a credit building credit card if you do not qualify for mainstream cards - full details can be found in our article “Compare the best credit cards if you have bad credit”.

Things to consider before getting a 0% credit card

Before applying for a 0% credit card, you should think about your options carefully. It is worth considering:

  • What do you need the credit for? If it is for a large purchase, is this something you could live without?
  • If you are applying for a 0% balance transfer card, do you know what the transfer fee is? Could you save money with a shorter 0% deal but lower fee?
  • Will you be able to afford the monthly repayments? Keep in mind the minimum monthly repayment set by your provider is likely to be low - it is always best to pay more than that if you can
  • Do you know how much interest you’ll be charged at the end of the 0% period and do you have a plan in place for when that happens?
  • Have you checked your credit score? A good score means you are more likely to be accepted for the top deals.

 

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