What are 0% purchase credit cards?
Normally when you use a credit card to buy something, you’re charged interest on your purchase. A 0% purchase offer is a deal-sweetener offered by lenders that waives the interest charges for a certain time period.
Since the offer is a promotion to entice new cardholders, you’ll need to be a new applicant to be eligible. There’s often an expiration date for 0% interest offers, so you’ll have to apply before the offer ends.
You’ll get the most benefit out of a no interest card by paying off the full amount each month, and making sure the card is paid off completely before the introductory 0% interest period ends.
If you don’t pay off the balance in full each month, you’ll still need to make minimum repayments like any other credit card.
All types of interest free credit cards
There are a few types of ‘interest free’ credit cards, so it’s a good idea to compare apples to apples.
Here’s a summary of the different types of no interest offers out there:
|Lifetime 0% Interest Cards||Cards that have no interest charged, ever, were introduced to rival the Buy Now, Pay Later scene. Instead of charging interest, you’ll only pay a small monthly fee (around $10 - $22) which is waived by some lenders if you pay off your card in full each month. |
The downside to interest free cards is that they’re extremely basic, and won’t offer any of the benefits that come with more high-powered cards offering 0% interest as a promotion.
And, if you don’t meet the criteria for waiving the monthly fee, you might find yourself paying just as much each year – if not more – than a card with more perks, like earning rewards points.
You can find out more about interest free credit cards here:
Westpac Flex: 0% interest, $10 monthly fee (waived if you pay your card in full each month). Flexible repayment options, but a low credit limit of $1,000.
Commbank Neo: 0% interest, and a monthly fee on a sliding scale depending on the credit limit (fees start from $12). The fee is waived if you don’t use your card and have a zero balance that month. Credit limits are $1,000, $2,000 and $3,000.
Community First Credit Union nOw: 0% interest with credit limits between $1,000 and $3,000. Monthly fees are based on credit limit and start at $9 per month.
|0% Balance Transfer Cards||A card with a 0% balance transfer offer means you won’t pay interest on debt you move from an existing credit card to the new one. These cards are super helpful for paying down debt, because you won’t be hit with interest during the interest-free period. |
Some cards waive interest on balance transfers for up to 36 months, giving you a decent chunk of time to repay any money you owe without penalty.
To see more, and to compare the cards on offer with our one-click comparison tool, go to our 0% balance transfers guide.
|0% Purchase Offer Promotional Cards||Introductory offers that waive the purchase rate for a period of time are useful because you get all the bonuses of a regular credit card without paying the normal interest on your purchases. |
When you’re choosing a 0% purchase offer credit card, always look at the interest rate that will apply after the introductory offer ends, especially if you plan on keeping the card long-term.
The cards in this guide all offer introductory 0% interest. Click each card for a full review and to see all the extras you’ll get.
What can you save with a no interest credit card?
Let’s look at an example of using a card with and without interest on a large purchase where interest is charged at 20%.
You buy a large-screen TV for $3,000 and pay down $250 each month. It’ll take you 14 months to pay it off, and you’ll pay $376 in interest.
With an interest free card, you could pay off your TV in 12 months and pay no interest, saying you $376.
What can you use a 0% purchase credit card for?
0% purchase offer cards are flexible little cards. They allow you to use your card without penalty for the interest free period.
Eligible purchases: you can use an interest free card for regular eligible spending without paying interest in the introductory timeframe. Think supermarket shopping, big-ticket items, technology, and dining out.
Purchases that might invite interest: Even with a 0% purchase offer, you might be charged interest on cash advances (where you withdraw money from your card), foreign currency purchases, and BPAY payments. The card’s PDS will outline eligible and ineligible transactions.
0% on Credit Card Purchase Offers - Frequently Asked Questions
Introductory periods vary. Some cards may offer introductory periods up to 17 months – and sometimes even longer – while others may last six months or so. Why does it vary so widely?
The type of card: You may find cards with low interest rates, or low or no annual fees have shorter 0% purchase introductory periods. On the flip side, higher end cards with higher annual fees and interest rates hand out longer introductory periods.
That’s not a black-and-white rule though, so make sure to compare all the options to find the one that suits you.
The card provider: In the world of credit card providers, there are big fish and little fish. Big fish, such as the Big Four banks, have bigger budgets, which can make it easier to provide bigger introductory offers. Smaller institutions, like 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 our comparison tool to weigh up the different offers from a range of providers.
The popularity of the offer: Introductory offers can rise and fall in popularity. When comparing introductory offers, you might find there’s more options and better deals on balance transfers, because at that time they’re a more popular type of offer.
Then, 0% purchase offers might start trending again – you never know, which is why it’s a good idea to keep checking in and comparing cards to find the best deals.
Once the introductory period is up, the card’s standard purchase rate comes into play (called the revert rate). So, any new purchases, and anything left unpaid, will be charged interest at the card’s revert rate.
Just a warning – the revert rate can often be quite high, sometimes over 20%, especially if it’s the same as the card’s cash advance rate.
Always check the card’s revert rate, especially 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.
Interest-free days aren’t the same as introductory 0% purchase rate or lifetime interest free cards.
Normally, interest is charged daily, so if you buy a latte you’ll be charged interest immediately. With a card offering 45 and 55 days interest free, you won’t be charged until your interest free days expire.
Interest free days work best when you plan to pay off your card each month, because you’ll be paying it off within the interest free days and won’t be charged.
You can also check that the card has interest free days once your promotional period ends.
Our one-click comparison tool makes it easy to compare cards against each other, and even calculate what you could save by switching cards.
Just use the toggles in the comparison tool to sort the cards in order of the features you want to prioritise. Here’s some things to think about when you’re comparing:
The introductory period. Offers can last anywhere up to 17 months (these kinds of interest free offers are always promotional and change regularly). You might think longer is better, but you should make sure everything else about the card stacks up, too. What are the annual fees? Does it have interest free days once the offer ends? What’s the normal interest rate (also called the revert rate) that’ll come into effect when the offer is finished?
The standard purchase rate. The purchase rate is the percentage of interest charged on your purchases. It’s also called the revert rate when it comes into place after a promotional offer ends. Check the revert rate if you’re planning to keep the card long term, especially if you’re not sure you’ll pay it off in full each month.
The annual fee. Annual fees vary, from no fee at all up to a few hundred dollars. Some cards offer a discounted first year, which can be helpful to keep your card costs to a minimum for a time.
Features. Does the card have any other perks that make it a better fit for you? Sometimes you might opt for a slightly higher annual fee if it means you’re getting a feature that you’ll get a lot of value out of. Click each card to see a full review of its features, pros and cons.
Yes, interest free just means you won’t be charged interest, but you’ll still have to pay a minimum repayment each month. Typically, minimum repayments are 2-3% of the balance or $20-$30, although those rates can be different between lenders.
It’s usually a good idea to make more than the minimum repayments, so you pay your balance down faster – especially if you know the introductory 0% purchase offer is coming to an end.
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’re 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 introductory period.