Want to make purchases now and pay no interest for up to 15 months? Compare 0% purchase rate credit cards to find the right card for you.
Credit cards can be a great way to pay for products and services when you don’t have the money. Unfortunately, the money you repay usually accrues interest which can add up in the long run. Some cards help alleviate this financial burden by providing their cardholders with interest-free days on purchases if they pay their account’s closing balance in full each month. Other providers allow new cardholders to take advantage of 0% purchase interest rates through introductory offers that are usually in place for the first few months.
Use this guide to compare your options and determine whether a 0% purchase rate credit card is the right choice for you.
Comparison of 0% Purchase Rate Credit Cards
The finder.com.au list of best* 0% purchase rate credit cards
Compare the features of the balance transfer cards below.
|Virgin Australia Velocity Flyer Card - 0% Interest Offer||Get 0% for 12 months on purchases with Velocity points earnings per $1 spent.|
|ANZ Platinum Credit Card - Exclusive Offer||An exclusive offer with 0% for 3 months on purchases and a long-term balance transfer offer.|
How do 0% purchase credit cards work?
A 0% purchase rate credit card is one that charges 0% p.a. interest on purchases made within a given time period that begins from the card’s activation. This time period typically varies from three to 12 months, but since there is no hard and fast rule, and because these offers come and go from time to time, referring to ongoing promotions at the time you wish to get a new card is always a good idea.
Such cards are ideal for individuals who wish to make large purchases or several small purchases, which they cannot pay off in full during the next payment cycle. This type of card gives you the ability to buy now and pay later without the burden of interest, provided you pay the entire amount before the promotional period ends. At the end of the promotional period, any outstanding balance starts attracting the card’s standard purchase rate.
How to successfully use 0% purchase credit cards
The money you use for purchases through a 0% p.a. purchase rate credit card essentially works as an interest-free loan, and to make the most of it you should follow certain simple measures:
- Make purchases quickly
The interest-free period on purchases begins from the moment you activate your card, and stays in effect for a provided time period. As a result, the sooner you make a purchase or more, the longer you get to repay the money without paying any interest.
- Periodical payments
An introductory 0% p.a. purchase rate does not imply that you don’t have to make any repayments during the promotional period. You would still receive a statement each month, and you would be required to make at least the minimum required payment each month. If you miss making even a single payment, you can expect the promotional rate to end immediately.
- Repay the amount within the offer period
You should ideally try to pay more than the minimum monthly payments, because once the promotional period ends any outstanding balance starts attracting interest.
- Avoid cash advances
Cash advances in any form, whether you withdraw money from an ATM or use your card at a gambling table, start attracting interest from day one. So you'll want to avoid them if you don’t want to pay high interest.
- Don’t exceed your credit limit
If this happens, your credit card provider can withdraw the promotional purchase rate.
- Think twice about balance transfers
Some such cards offer promotional balance transfer rates as well. If you do plan to use such a card for balance transfers, know that both offers run independently of each other, and there’s a good chance that the purchase rate offer may be forfeited if you have a balance on your account.
How to compare 0% purchase credit cards
When you’re comparing cards with 0% p.a. purchase rate offers its important to pay due attention to the following aspects:
- Length of interest-free period
The longer you get to repay the money you spend on purchases without having to pay any interest, the better.
- Standard rate
This is the interest outstanding balances from purchases attract after the promotional period comes to a close. Bear in mind that the purchase rate can vary significantly from one card to the next.
- Annual fees
The presence and cost of the annual fee will vary from card to card. If there is an annual fee in place, make sure that it doesn’t override the savings of you’d make through the interest-free offer.
- Additional features
Some cards offer extra features, so you’ll want to compare these to make sure that the additional perks are of value to you. For example, you may be interested to find out if your card offers interest-free days on purchases once the initial interest-free period expires. On the other hand, some cards may offer a rewards program or may come with complimentary travel or purchase insurance cover. Compare your options and make sure that the additional features suit what you want and need from your card.
What are the pros and cons of using a 0% purchase credit card?
- Save money. This, without a doubt, is the biggest benefit of getting a 0% p.a. purchase rate credit card. As long as you abide by the terms and conditions you don’t have to pay any interest during the promotional period.
- Get what you want. If you’ve desired something for a while but can’t pay for it in one go and don’t want to pay any interest, using such a card gives you the ability to buy just about anything you want without paying interest.
- Requires budgeting. You can’t expect a credit card debt to pay itself off, and if you don’t budget your repayments in advance, you could end up with an outstanding balance after the promotional period ends. If this happens you’ll have to start paying interest, which, over time can add up to a tidy sum.
- Invalidate the offer. Things you do can work in invalidating the offer, so it’s important that you review the offer’s terms and conditions at the onset. You can invalidate the offer by making a late payment, missing a payment, or exceeding the card’s credit limit.
Questions asked about 0% purchase rate offers
Can anyone apply for a 0% p.a. purchase rate credit card?
If I pay the outstanding balance in full before the promotional period ends and want to close my account, will I have to pay any additional fees?
As long as you pay your credit card account’s balance in full, you don’t have to pay any fees to close your account.
I’ve been using a 0% p.a. purchase rate credit card for two months, and the promotional rate lasts for three months. If I make a purchase now, will I get three interest-free months to repay it?
Unfortunately, the answer to this is no. The interest-free days begin from the date of your card’s activation, and if you’re already two months in, a purchase you make now would give you no more than a month as interest-free time.