What are 0% purchase credit cards?
Quite simply, a 0% purchase credit card is a card that has a 0% introductory offer on purchases. New cardholders who apply and are approved for a 0% purchase credit card will pay no interest on any purchases they make throughout the introductory period. This makes them a great option for anyone who wants to pay no interest for a short period of time.
0% on Credit Card Purchase Offers - Frequently Asked Questions
One of the great things about 0% purchase offers are their flexibility. As long as you keep to your credit limit, you can use your card to buy whatever you want within that introductory period.
- Want to make one big purchase and pay it off within the introductory period? Whether you’re looking to buy a washing machine or pay for a family holiday, a 0% purchase offer could make it happen.
- Want to cover the costs of an ongoing project? Using a 0% purchase offer to cover projects such as home renovations lets you buy what you want, when you need it, to then pay it all back before interest starts accruing.
- Want to save on interest day-to-day? Even if you’re just using your card for everyday spending, a 0% purchase offer could give you a bit more freedom to spend what you want – as long as you have the funds to pay it all back when the intro period ends.
Introductory periods vary. Some cards may offer introductory periods up to 15 or 18 months – and sometimes even longer – while others may last six months or so. Why does it vary so widely then?
Type of card: You may find low cost cards, such as low rate cards and low or no annual fee cards, offer shorter introductory periods on 0% purchase offers, while higher end cards with higher annual fees and purchase rates offer longer introductory periods. However, this is not always the case, so be sure to compare the options carefully on CreditCard.com.au to find the offer – and card – that works for you.
Card provider: In the world of credit card providers, there are big fish and little fish. Big fish, such as the Big Four, have bigger budgets, which can make it easier to provide bigger introductory offers. Smaller institutions, such as credit unions and member-owned banks tend to rely more on low ongoing costs rather than big introductory offers. But, that’s not to say you can’t get a great deal going to a smaller provider. Use CreditCard.com.au to compare 0% purchase offers from a wide range of providers to make sure you get the right offer for you.
Popularity of the offer: Introductory offers can rise and fall in popularity. When comparing introductory offers month-to-month, you may find there are more options and better deals on balance transfers, as that is the more popular type of offer. The following month, you may find there are better deals on 0% purchase offers. Keeping track on CreditCard.com.au can let you see which offers are trending, making it easier to find the best offer for you.
Once the intro period is up, the card’s standard purchase rate comes into play. That means, any purchases left unpaid – and any new purchases made from that point on – will start accruing interest at the card’s standard rate.
When comparing 0% purchase offers, always check the card’s standard purchase rate (also known as a revert rate). This is especially important if:
- You plan to keep the card past the introductory period.
- You don’t always clear your balance month-to-month.
- You may not pay off all purchases made within the introductory period.
Happily, CreditCard.com.au makes it super easy to compare 0% purchase offers. But of course, you need to know what to look for when you compare each offer side-by-side.
- Introductory Period: Think about how long you want the offer to last. Typically, the longer the better, but you should take other factors into account, such as how much the card will cost in annual fees, and what interest you will pay in the long term.
- Standard Purchase Rate: If you plan to keep the card after the intro offer, be sure to check the card’s standard purchase rate. This is especially important if you think you may not pay off all your purchases by the end of the intro period, or if you tend to carry a balance month-to-month.
- Annual Fee: Find out how much you will pay in annual fees in return for the card’s intro offer and the various other features provided.
If you want to keep the card past the intro period, you will also need to think about its suitability in the longer term. That means looking at features, fees and other factors.
Step 1. Choose the offer that works for you. Think about how long the offer lasts and what else the card has to offer.
Step 2. Make a plan for your purchases. If you have specific purchases in mind, such as a holiday or a renovation project, make a budget and avoid spending over it. Keep track of your spending month-to-month to make sure you are not spending more than you can afford to pay back.
Step 3. Set up a payment plan. Know how much you need to pay back each month to clear your purchases before the end of the intro period.