What happens when a 0% p.a. purchase rate period ends?
If you get a credit card that offers a 0% p.a. interest rate on purchases during the introductory period, the card’s standard purchase rate will apply after that.
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A 0% p.a. purchase rate credit card gives you a limited amount of time when you can shop interest-free. If you pay off your card before the end of the introductory period, you won’t be charged any interest on those purchases. But if you still owe money on some of your shopping at the end of the 0% p.a. introductory period, you will be charged interest on your balance.
If your card offers a long introductory period, it could also take you a while to get to use the “standard” features when you use the card to make new purchases. So, to help you adjust, this guide goes through the different changes that happen at the end of the introductory period, as well as tips to help you manage your account.
Key features to be aware of at the end of a 0% p.a. purchase rate period
- The standard purchase rate. If you’re still paying off your purchases, this interest rate will apply to your balance. The standard purchase rate will also apply to any new purchases you make on the card (unless you’re eligible for interest-free days).
- Interest-free days. Most credit cards offer interest-free days on new purchases during each statement period. This gives a way to keep shopping without being charged interest, even after the introductory period on your card. There is a catch though: usually you need to pay off your card's full balance by the statement due date to be eligible for interest-free days. So if you're carrying a balance, interest will usually apply to new purchases from the date they are made. You can learn more about interest-free days in this Finder guide.
- Payment allocation. When you make a payment on your credit card, it will go towards paying off the part of your balance that attracts the highest interest rate first. During the 0% p.a. purchase rate period, this might not have much impact unless you use your card for cash advances or have a balance transfer that’s being charged interest. But at the end of the 0% purchase rate period, it could affect how quickly you pay off different parts of your balance, particularly if you have a balance transfer debt.
How can I tell when the introductory 0% p.a. purchase rate period ends?
The quickest way to check when the introductory period ends is to look at your credit card statement or call your credit card provider and ask for the exact date that the 0% p.a. purchase rate period will end.
If you haven’t applied for a 0% p.a. purchase rate card yet, you can check how long the introductory period is by looking at the advertised offer. For example, a card might give you “0% p.a. on purchases for 6 months”, which means the introductory period would last for the first 6 months you have the card.
Tip: Set a calendar reminder
If you don’t want to pay any interest on your purchases, you could put a reminder in your calendar for when the 0% p.a. interest rate period ends. This could make it easier to budget for repayments so that you can clear your credit card’s balance before interest charges apply.
Check when the introductory period begins
With some credit card offers, the 0% p.a. purchase rate period begins from the date that your application is approved. This means you might have less time to actually make purchases, depending on when you actually receive and activate your card.
There are also some credit cards that start the introductory 0% p.a. purchase rate period when you activate your card. If you know which type of offer you have on your card, you can work out when the introductory period ends then plan your spending and payments around it.
What can I do if I still owe money at the end of the 0% purchase rate period?
Sometimes it’s not possible to pay everything off before the end of the introductory period. If that's the case, the next step is to decide how you want to deal with the debt. Below are the different options you can consider:
- Pay off your balance on the existing card. This is the simplest option, because all you need to do is continue transferring money to the existing credit card account whenever you can make a payment. You can use a repayment calculator to work out how long it will take to pay off based on the interest rate and what’s affordable for you. If you’re feeling proactive, you could also schedule regular transfers from your everyday account so that money goes towards the balance every time you're paid.
- Find out if an instalment plan is available. Some credit cards offer instalment plans that can help you pay off your balance in fixed payments, over a set period of time. Depending on the card, you may be able to set up one of these plans and enjoy a reduced interest rate while paying off the remainder of your balance. If that’s not the case, you could still schedule your payments based on how much you can afford to put towards the card every payday so that you continue to chip away at it.
- Apply for a balance transfer credit card. If you owe a lot of money on the card and the thought of interest charges is really worrying you, another option is to move the debt to a credit card that offers 0% p.a. on balance transfers for an introductory period. This could give you up to 24 months (or more) to pay off the debt without being charged interest, although it does mean you’ll have to get another credit card.
- Consider other finance options. If you feel like the temptation to spend is getting out of hand, you may want to look at other debt consolidation options, such as a personal loan. This would give you a way to cancel the card and pay off the debt at a pace that works for your budget.
If you need to make a lot of purchases in a short amount of time, or if you have a big-ticket item to buy, getting a card that offers 0% p.a. on purchases can save you money on interest charges. But there is also a risk that you’ll pay more when the introductory period ends and standard rates apply.
Before you get one of these cards, make sure you compare different offers, take note of when the introductory period starts and plan your repayments so that you can avoid interest charges or at least keep them to a minimum.
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