0% Purchase Cards can help reduce the impact of big purchases on your day-to-day finances.
What are 0% purchase credit cards?
Credit cards have always been useful for purchasing 'big ticket' items, because they’re widely accepted and offer increased purchase protection, when spending over £100.
However, although useful, the high-interest rates traditionally charged on credit card debt meant they were unattractive for longer-term borrowing (anything over one month). This changed with the development of 0% purchase cards.
0% purchase cards enable people to avoid interest charges on new debt for a fixed period. So, used well, credit cards can now be one of the cheapest ways to borrow.
Which 0% purchase credit card is best?
In a nutshell, the 0% purchase credit card with the longest introductory purchase period is the best.
Unlike balance transfer cards, which offer different combinations of 0% durations and transfer fees (meaning users need to select the optimum combination to ensure they get the best deal), comparing 0% purchase cards is very straightforward.
Of course, there are other fees and charges to consider, but if you use your card wisely, these can be easily avoided.
Can I get a 0% purchase card?
0% purchase credit cards are available from a number of UK card issuers, and for a range of different credit scores.
Naturally, the 0% purchase cards available to those with bad credit scores offer shorter introductory purchase periods than those for people with a good/excellent credit history, but they are available nonetheless.
Of course, availability does not mean acceptance. Each card issuer will assess each application on its merit when deciding whether to offer you credit, using their particular eligibility criteria.
The exact eligibility requirements for each credit card are unique, but many card issuers provide guidance to help prevent unsuccessful applications, and some requirements are common to all.
Common eligibility requirements include your credit status…
CCJs (County Court Judgements)
Some card issuers will accept you even with a CCJ. However, even those accepting CCJs are unlikely to accept you if you have acquired a CCJ recently (within the past year). Also, if you've had more than one CCJ, your prospects for approval are very limited.
Bankruptcy As with CCJs, bankruptcy, especially recent bankruptcy, will severely restrict which products are available to you.
Credit history Your past approach to credit is of critical importance to prospective lenders. That doesn't mean your credit history needs to be perfect, but it should demonstrate that you have always tried to pay your debts. If your credit history is limited, you'll probably find that lenders are unwilling to take a chance on lending to you
...your financial circumstances
Current debts If you already have too much debt, you will not be offered more.
Income Most issuers set a minimum level of income required. If you do not achieve this level with your salary and/or benefits, you’ll be declined. That said, income requirements do vary by card issuer and individual product, so comparing products is very important before you apply.
...and your personal circumstances.
Do you have a fixed address (ideally as an owner), or do you regularly move? Lenders will want to know where they can contact you if you fail to pay what you owe. If you’re a bit of an urban nomad, you're unlikely to get credit.
Getting your name on the electoral roll (regardless of whether or not you vote) will help you install confidence in your residential permanency
How do I apply for a 0% purchase credit card?
As with most credit cards, applying for a 0% purchase card is a relatively painless process. Online application forms can be completed within a matter of minutes (assuming you have the necessary details to hand) and once the application form has been submitted, most card issuers will return a decision within 60 seconds.
To do this, card issuers use algorithms to automate decision making, using application form data and credit reference agency information. Automation ensures the majority of customers are instantly informed whether or not their application has been accepted. However, manual intervention is still necessary for some applicants. When this occurs, the applicant is informed that they have been referred for further processing.
Getting the most from your 0% purchase card
Although some purchase cards also offer additional benefits (like loyalty scheme points on shopping) the main benefit of 0% purchase cards is the interest-free shopping they offer. So, how do you ensure you do not lose your 0% period, run up unsustainable debt, or forfeit the purchase protection your card should offer you?
Always make at least your minimum monthly payments, and do so in good time. Your credit card statement will include details of your minimum payment, and the date by which it must be made. Set up this payment leaving enough time for it to clear – be especially careful over bank holidays and weekends, as payments may be delayed
Never make purchases on your card unless you are certain you can pay the money back. This might mean splitting the cost of a purchase over a number of months and paying a little each month. Whatever your approach, you should not reach the end of your introductory 0% period with a significant balance still to pay, because your interest rate will leap up to the standard purchase rate, and you will quickly start accruing high rate interest
If you are making purchases of £100 or more, try to use your credit card. In many instances this will give you protection from Section 75 of the Consumer Credit Act. So, if your goods are defective, you can claim a full refund from your credit card issuer. You will only get this protection if you use your card directly with the supplier of goods and services. If they use a payment gateway (like Paypal, SagePay, or even the Amazon Marketplace) your claim will be rejected
Never use your card for cash withdrawals. ATM withdrawals instantly incur transaction fees and high interest.
Yes and no. If you spend abroad the purchase will probably qualify for 0% purchases (check with your individual issuer). However, most foreign transactions still incur a non-sterling transaction fee, and this will be applied regardless of your 0% purchase deal – adding to the fees and charges you should avoid if you’re using your card well.
Yes, in most instances you can use Direct Debits. You’ll need to decide how much to repay – the full balance, the minimum repayment, or a fixed amount. To ensure you repay in full, a fixed amount (that is higher than the minimum repayment) is usually the best method to ensure your card debt is cleared before your introductory period expires.
Assuming your credit score is reasonable, you may be able to transfer your balance to a balance transfer credit card. These cards offer 0% on balances transferred from existing cards. You’re unlikely to be able to transfer to your existing card provider, but a number of credit card issuers offer these products, so you should find something suitable to your needs. If you need to do this, apply in good time, so you can make your transfer before any interest charges apply.
Many UK credit card issuers adjust the specific deal they offer to applicants using ‘Risk Based Pricing’. This means that people considered to be of higher risk of default are offered different/less competitive rates. Risk based pricing is completely legal (issuers only need to offer the advertised rates to 51% of applicants) and means they are able to promote their most favourable terms. It also enables them to offer credit to people they might otherwise decline.
Balance transfer and purchase cards combine the main benefit of balance transfer cards with the main benefit of 0% purchase cards. Customers with existing debt are able to continue to pay down their existing balance, whilst retaining the flexibility to make new purchases at a preferential rate.
Although customers of 0% transfer and purchase cards often forfeit a number of months at 0%, when compared to the leading 0% balance transfer deals, these cards offer a degree of flexibility that neither product can offer in isolation.
Yes, but you shouldn’t. Cash transactions on 0% purchase cards incur high fees and interest immediately. If you need to make a purchase that requires cash (eg. private car sale), you should look at alternative products, perhaps a traditional loan or a money transfer credit card.
Money transfer cards enable you to transfer part of your card balance directly into your bank account for a fee. This money can then be withdrawn to use as you decide.
Yes. Your options will be more limited than people with good/excellent credit and you’re unlikely to get a long 0% purchase duration, but there are products available that are designed for your situation. Of course, if you have bad credit, it is even more important that you follow our guidance for getting the most from your purchase card, as a misused card could make your situation even worse.
It’s not a trick, so don’t worry. However, it does amplify why you need to clear your balance before your promotional rate ends. Assuming you meet the requirements of your credit agreement, you’ll get the 0% rate you have been offered. However, if you final to meet your commitments, or your deal expires, you’ll revert to the standard purchase rate for your balance – which means you will be charged a high interest rate.