A 0% purchase rate credit card gives you a way to spend without being charged interest during an introductory period. With this type of offer, you’ll typically get an interest-free period that lasts between 3 and 15 months from when you’re approved for the card.
What’s the catch with 0% purchase rate credit cards?
At the end of the introductory period, the 0% interest rate reverts to the credit card’s standard rate for purchases. When that happens, you'll be charged interest on any purchases you haven't paid off during the 0% p.a. period. Any new purchases you make will also attract interest charges at the standard rate for your card.
This means potential interest charges and debt are the biggest risks to watch out for with a 0% purchase rate offer. But you should also pay attention to credit card annual fees, which can add to your upfront costs.
How does a 0% p.a. purchase credit card work and when is it useful?
0% purchase credit cards can help you save on account costs when you need to make a large purchase, or when you know you’ll be spending a lot of money in a short amount of time. For example, if you’re travelling overseas, shopping for Christmas presents or planning a wedding. In these situations, a 0% p.a. credit card gives you a way to get what you need when you need it and pay it off over time with zero interest.
However, if you’re still carrying a balance from your purchases after the introductory period ends, the card’s standard interest rate will apply to the debt. Paying off a 0% purchase credit card before the end of this period means you will get the greatest value from the interest-free offer.
How much money can I save with a 0% interest credit card?
Say you want to book an overseas flight that costs $2,000 and plan to put $200 a month towards paying it off. If you paid for your flights on a credit card with a 17% p.a. interest rate, it would take you around 11 months to pay off the balance and cost you about $172 interest charges.
In comparison, if you had a credit card that offered 0% p.a. on purchases for 12 months, you could pay off your flights in 10 months without any interest charges.
How can I find the best 0% purchase rate credit card?
Credit cards with 0% purchase rate offers are designed to suit different goals, so there isn’t one “best” option. Instead, find the right card for you by considering and comparing these features:
The 0% purchase rate period. This introductory period typically ranges from 3 to 15 months, so make sure you think about how much you're going to spend and whether or not you’ll be able to pay it off before the standard purchase rate applies. If you can't pay it off before the end of the introductory 0% interest period, you might want to apply for a card with a longer introductory period or be prepared to pay some interest when the offer ends.
Annual fee. Ideally, the value you get from your credit card should outweigh this cost. As well as considering the potential savings you’ll get during the introductory 0% p.a. interest period, make sure you weigh up the value of other ongoing perks on the card – such as complimentary insurance or rewards. You could also look at credit cards that have no annual fee to see if any of them also offer an introductory 0% purchase rate period.
Standard purchase interest rate. This varies between cards but is typically between 13% p.a. and 22% p.a. If you don't think you can repay the entire balance before the 0% purchase rate period ends, think about whether the ongoing purchase rate will be affordable. You could also look for a card that offers a low ongoing purchase rate or consider transferring the debt to a card with a 0% balance transfer offer so you can continue paying off your debt without interest over a promotional period.
Foreign transaction fees. While the introductory 0% p.a. rate will apply to purchases you make overseas, you may still be charged a fee worth approximately 2-3% (or more) for transactions made overseas or online with an international business. You can compare credit cards which do not charge currency conversion fees in our detailed guide.
5 common mistakes to avoid with 0% purchase credit cards
If you want to get the most out of a credit card's 0% p.a. introductory period, watch out for these traps:
Ignoring the standard purchase rate. At the end of the promotional period, the 0% purchase rate will revert to the standard variable purchase rate, which usually sits between 13% p.a. and 22% p.a. This makes it important to check the standard purchase interest rate before applying for a credit card so that you're aware of the potential costs if you don't pay off your purchases during the introductory period.
Forgetting to make repayments. Even with an introductory 0% p.a. interest rate on your credit card, you still need to pay at least the minimum amount listed on each statement. This is usually 2% or 3% of the total balance or a minimum dollar amount, such as $20 to $30. If you don't pay the minimum that's listed by the due date on your statement, you could be charged a late payment fee.
Only paying the minimum amount. If you only pay the minimum repayment amount that's listed on each statement, you won't repay the entire balance before the 0% interest offer finishes. Any balance remaining after that will be charged interest at the card's standard rate, making it harder to pay off the debt. To avoid this situation, aim to pay off all your purchases before the introductory period ends. If you're unable to repay your balance before the 0% purchase offer ends, a balance transfer might be the next step.
Ineligible transactions. This type of 0% credit card interest rate offer only applies to eligible purchases. So if you use your card for balance transfers, cash advances, government payments or other cash-equivalent transactions, the card's standard interest rate will apply to these charges (unless a separate promotional offer applies).
Not planning your purchases within the offer period. The 0% purchase rate offer is available as soon as your credit card is approved, not from when you make your first purchase. So if you get a credit card with 0% p.a. on purchases for six months but you don't make a purchase or any repayments for the first month, you'll only have five more months of the interest-free period. If you have a big purchase in mind, make it as soon as possible and start making repayments immediately to get the maximum value while the offer lasts.
Credit cards that charge an introductory 0% p.a. rate on purchases can be a great way to save money on big-ticket items or upcoming expenses, but only for a limited time. When comparing these cards, pay attention to the length of the promotional period, what interest rate applies at the end of the introductory offer and any other card features and fees so that you can find one that suits your needs.
Frequently asked questions
If you want to know more about 0% purchase credit cards, here you'll find answers to some of the most common questions. You can also get in touch using the comment box below to leave your own question about 0% purchase credit cards.
A 0% purchase rate offer lasts for a limited amount of time from when you first get the new credit card. During this introductory period, you won’t be charged interest on purchases as long as you pay the minimum amount listed on each statement.
In comparison, a credit card with interest-free days gives you a window of time in each statement period when you can make purchases without being charged interest. Usually, you need to pay the total amount owed on each statement to be eligible for interest-free days.
For the length of the 0% purchase promotion period, standard interest-free days offers do not apply. If your card comes with an interest-free days feature (say, for up to 55 days), then you'll be able to take advantage of this when the promotional period ends. Note that this type of interest-free period usually only applies if you pay your entire balance in full by the due date on each statement.
Once you've activated the credit card, all eligible purchases that you make will be interest-free until the end of the promotional period. However, any purchases that haven't been repaid by the end of the introductory period will collect interest after that.
Credit card annual fees are usually not considered eligible purchases. So if you get a promotional 0% purchase rate credit card that also has an annual fee, you'll probably be charged interest on that part of your balance. You can contact the individual credit card providers to find out if this fee would be eligible for a particular interest-free promotion. Alternatively, you may want to consider cards that offer no annual fee.
With this type of credit card, the promotional 0% interest rate is available for a fixed time period. For example, let's say you get a card offering 12 months interest-free on purchases from when you activate the card.
If you make a purchase on the day you get (and activate) your card, you will have 12 months to pay it off before interest is charged. If you make another purchase after three months, you will have nine months remaining for the 0% interest period, while if you make a purchase 11 months after getting the card, you'll only have one month interest-free for that purchase. After that, your 12-month interest-free offer will end with the interest rate reverting back to the standard purchase rate for that card.
After your 0% purchase promotion has finished, the outstanding balance from your purchases will be charged interest at the regular purchase rate, usually known as the "revert rate". You can consider moving your outstanding purchase amount to a 0% balance transfer credit card, which will give you more time to repay your debt interest-free.
These cards usually charge 0% interest on purchases for 3 to 15 months. You can sort the credit cards by "purchase rate" in the comparison table above to see which cards offer the longest interest-free period.
While you could be able to use your card to pay for utilities and government payments, these transactions are sometimes listed as ineligible for the 0% introductory interest rate offer. Check the offer details or contact the credit card company directly to confirm what types of transactions are eligible for the interest-free offer.
Amy Bradney-George is the acting editor for Finder X and a senior writer for credit cards and Finder Green. She has more than 13 years' experience as a journalist and writer, with bylines in publications including The Equity Magazine, The Sydney Morning Herald, ABC News and produce industry website FreshPlaza. Amy has a Bachelor of Arts in Journalism and Drama from Griffith University, and when she’s not putting (virtual) pen to paper, she spends her time as an actress.
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