Many Australian credit cards boast a 0% interest rate on purchases, allowing you to pay off your shopping with no additional costs for an introductory period. While some offer interest-free purchases for 3 to 6 months, others can run for as long as 12 to 14 months.
At the end of the introductory period, any remaining debt will attract the standard purchase rate. This is why it’s important to find an offer that gives you enough time to clear your balance in full. You can use this guide to compare long-term 0% purchase credit cards, learn how they work and find the right interest-free option for you.
Exclusive to finder.com.au - St.George Credit Card Offer
0% p.a. for 14 months on purchases
$0 first year annual fee
Offer ends 12 February 2020
Eligibility criteria, terms and conditions, fees and charges apply
Exclusive to finder.com.au - St.George Credit Card Offer
Save money on both new purchases and existing card debt with this exclusive Finder credit card offer for the St.George Vertigo.
- 0% p.a. for 14 months on purchases (reverts to 13.99% p.a.)
- 0% p.a. for 6 months on balance transfers (reverts to 21.49% p.a.)
- $0 annual fee for the first year ($55 p.a. thereafter)
- Additional cardholder at no extra cost
Compare credit cards with long-term 0% purchase interest rates
Updated December 15th, 2019
Who are long-term interest-free credit cards best suited to?
Credit cards with interest-free promotions help cardholders reduce their interest payments and save money for an introductory period. An interest-free period could be considered long-term if it lasts between 12 and 14 months or more.
You could benefit from one of these cards if you’re making a large purchase (or several purchases) and need more breathing room to pay it off without any interest. This is especially useful if you have a high-spending period (such as an overseas holiday or Christmas) coming up.
At the end of the introductory period, any purchases you haven’t paid off will attract the standard interest rate, which could be as high as 22% p.a. on some cards. So, these cards will benefit cardholders who have the discipline to stick to a budget and repayment plan to clear their balance in full before interest applies.
How can a long-term 0% purchase rate offer help you save?
Let's say that you've moved house and need to spend $3,000 on some new furniture. If you got a credit card with an offer of 0% for 12 months and a $59 annual fee, you would need to pay $250 each month to repay the entire balance before the promotional period ends and the revert rate applies. Including your repayments and annual fee, this would bring your total costs to $3,059.
This is considerably lower than if you opted for a card with a standard interest rate of around 19% p.a. and no annual fee. If you paid $250 per month but were accruing interest at 19% p.a., it would take you 14 months to repay the $3,000 debt and cost you an additional $295 in interest.
4 tips to make the most of a long-term 0% purchase offer
When you use it effectively, a credit card that offers 0% on purchases for a long introductory period can be a great way to save on interest costs. So, here are some tips to make the most of the card:
Make purchases at the beginning of the introductory period. The interest-free period begins as soon as your card is approved, not after you make your first purchase. So if you have a card with 0% for 12 months and you make a purchase 2 months after you get your credit card, you’ll only have 10 months to pay it off interest free. To make the most of your low interest rate, try to make your big-ticket purchases soon after your card is approved so you have more time to pay it off without interest.
Only spend as much as you can afford to repay. You may not have to pay interest during the introductory period, but you do eventually need to pay off what you spend. Stick to a realistic budget and avoid overspending if you want to repay your purchases while the interest-free offer is in place.
Clear your balance before interest applies. The minimum payment you’ll need to make at the end of each statement period is usually only 2% or 3% of your total balance, so you’ll need to pay more than this if you want to pay off your card before you start accruing interest. One strategy you can use is to set yourself a spending budget and divide it by the number of months in the interest-free introductory period. This will help you determine how much you need to spend each month to clear the balance in full before the promotional period ends.
Don’t use your card to make cash advances. The 0% introductory offer only applies to purchases, excluding cash transactions such as ATM withdrawals and gambling transactions. If you make a cash advance, you’ll collect interest immediately and likely at a much higher interest rate (usually up to 23% p.a.).
How to compare long-term 0% purchase credit cards
There are many 0% purchase rate credit cards on the market, so you should consider these factors when comparing your options:
Length of offer. Long-term 0% purchase credit cards vary in length, so make sure you choose one that gives you enough time to pay off your purchases.
Revert purchase interest rate. While some long-term 0% purchase credit cards may revert to low ongoing interest rates (such as 12.99% p.a.), others can revert to a purchase rate as high as 20% p.a. It’s important to know what this interest rate is and when it applies in the event you can’t pay your balance in full before the interest-free offer ends.
Interest-free days. Most credit cards offer interest-free days as a standard feature. The number of days varies between products, but you can usually take advantage of up to 44 or 55 days interest free when you pay your balance in full by the statement due date. If you plan to use the card beyond the introductory 0% purchase offer, interest-free days is another way you can save on card costs if you clear your balance each statement. You can see finder's guide to interest-free days for more information.
Annual fee. If your card charges an annual fee, make sure that this cost doesn’t outweigh the savings you’ll get from the interest-free period. You can also look out for low interest cards with $0 or low annual fees if you want to save on the yearly cost.
Extra features. Credit cards with long-term interest-free offers are usually light on extra features, but some offer perks including complimentary international travel insurance, no foreign transaction fees or 0% balance transfer offers. These extras can help you get more value from your card, especially if you’re paying an annual fee.
Why do banks offer interest-free credit cards?
Depending on your balance, you can save hundreds or thousands of dollars with an interest-free credit card. So, what’s the catch? As mentioned above, if you don’t pay your balance in full, the credit card issuer makes money if your debt collects interest. Plus, the promise of a long-term interest-free offer might tempt you to continue spending on your card when you know you have more time to pay it off (which is why it’s important to stick to a budget).
If you have a card with no interest for 12 to 14 months, you may also have to pay one or two annual fees as one is charged when you activate the card and another is charged on the anniversary of that date. Banks also use these introductory 0% p.a. purchase rate offers to attract new customers.
Long-term 0% purchase credit cards can be a cost-effective way to pay on plastic. However, as there are many interest-free offers available on the market, make sure to compare your options before you apply.
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