0% credit cards explained - Are they right for you?
0 credit cards, also known as a 0% purchase card or 0 percent finance credit cards, are simply credit cards that don’t charge you interest on credit purchases, for a pre-agreed amount of time.
A low-interest credit card can help you to make expensive purchases upfront and pay off the cost over a set period of time, allowing you to spread the cost of your payments out.
In our guide below, we’ll share our top tips about 0% credit cards, including what you can buy with them and how they work.
How do zero percent credit cards work?
0% credit cards work by allowing you to make new purchases (usually quite expensive things) without having to pay interest on the repayments. This type of spending can save you a lot of money compared to a standard credit card, providing that you pay it off within the interest-free period.
What can you buy with a 0% credit card?
They’re usually used to pay for high-value purchases such as holidays, or concert tickets, but they can also be used to consolidate debt in some instances (providing that the credit card company offers interest-free benefits on these types of purchases), as well as in the event of an emergency.
For example, if you have to pay for an emergency plane ticket to travel home in the event of a family tragedy, or if your car desperately needs fixing, 0 percent credit cards can help to cover the costs without much fuss.
Is an interest-free credit card better than getting a personal loan?
The reason for getting either a credit card or a personal loan will depend on which option is better for you and your spending needs.
Typically, interest-free credit cards are considered to be a better option than personal loans, especially if you plan on borrowing a relatively small amount of money for a relatively short period of time.
However, if you need to borrow a much larger amount of money and you’re prepared to pay it off over a longer period of time then a personal loan might be the better option for you as you can borrow more money, usually at a lower interest rate (provided you have a good credit score).
Are 0% interest cards worth it?
Determining whether 0% interest credit cards are any good or not involves taking a look at the benefits they can offer you. The advantages include:
- Avoid paying interest for a set amount of time
- Spread the cost of high-value purchases
- Get credit card protection
However, it’s also important to consider the potential downsides of using 0% credit cards as well:
- The interest rates can jump up very high after the initial interest-free offer ends, so you need to be aware of this if you continue using the card after the 0% introductory offer. If you can, try to pay it all off before it ends.
- The interest rate doesn’t last forever, so check how long the introductory period is to see if it’s worth taking out a 0 credit card.
- If you plan to use a 0% credit card for balance transfers, check whether you will still benefit from the 0% interest as some cards will charge for balance transfers.
Am I eligible for a 0% credit card?
In order to determine your eligibility for getting a 0% credit card, you usually have to actually apply for the card as it’s really the only way to know whether you’ll be accepted.
However, you can use a ‘soft search’ tool to check your credit score to see if you would potentially be eligible for this type of credit card. Anytime you make an application for credit, it will be flagged on your credit file, which can negatively affect your credit score, so you should only really apply for a credit card if you’re pretty sure that you’ll be accepted.
Can a 0% credit card help boost your credit score?
Taking out a 0% credit card shouldn’t be your first and only option if all you want to do is improve your credit score, but it can help to boost your credit score, providing that you make regular payments on time and you don’t miss any repayments.
How to find the best interest-free card offers
If you’re thinking about getting a 0% credit card, then it’s important to carry out plenty of research to find the best one for you. There are so many credit card providers who offer 0% credit cards, it can be quite overwhelming to know which one to choose.
Therefore, before you make your decision, consider the below to help you make your choice:
- Take a look at how long the interest-free period lasts; the longer, the better, but some credit cards might only offer a few weeks of interest-free benefits.
- Find out how much interest you will have to pay once the introductory offer ends - you might decide that the rate is too high and isn’t worth it, even if you benefit from the 0% interest at first.
- If you find that multiple 0% credit card providers seem to be offering pretty similar deals, check whether they have any other benefits or rewards you might be able to enjoy such as air miles or vouchers to help sway your decision.
Martin Lewis’s 3 golden rules for no interest credit cards
MoneySavingExpert financial whizz, Martin Lewis, shares his three golden rules that you need to know before applying for a zero percent credit card:
- Try to clear the card before the end of the 0% period - pay it all off every month like an interest-free loan.
- Try to repay at least the monthly minimum amount (more if you can) so you don’t lose out on the cheap rate.
- Don’t use it as a 0% balance transfer credit card or withdraw cash from it as it usually comes with an expensive interest rate.