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Purchase credit cards explained

A 0% purchase credit card is a type of credit card that offers a 0% interest rate usually for a fixed period of time when purchasing goods and services online, in stores or in restaurants. This interest-free period allows you to spend without accruing interest, letting you spread the cost over a set time.

During the term of the 0% offer, you won’t be charged interest on your purchases (though this may not apply if you spend on the card overseas), and provided you pay the full amount off by the end of the introductory period, the credit won’t have cost you a thing. However, you will still be expected to make at least the minimum payment each month, and other card activities may still attract interest, such as balance transfers and cash withdrawals, though you may find that you have access to additional introductory terms depending on your particular card.

The purchase rate on a credit card is the interest rate that you’ll be charged on your purchases. You may see both an introductory and a standard purchase rate, with the introductory rate typically being the 0% offer, and the standard rate applying once the introductory term has come to an end. The representative APR will always be based on the standard rate.

The purchase offer duration is the length of time the introductory offer will apply for. Once it comes to an end (which can vary depending on your particular offer), interest will be charged at your standard purchase rate.

A purchase card is a type of credit card, the only difference between the two being that a purchase card will typically have an introductory interest-free offer, whereas a standard credit card may not.

Once the interest-free period does come to an end, interest will start to be charged on any outstanding balances and on any further purchases. At this point, it may be sensible to transfer an outstanding balance to a 0% balance transfer credit card, giving you more time to pay off the debt interest-free. If you plan to carry on spending, it will probably be best to look for another 0% purchase credit card.

Most sellers, whether they are on the high street or online, will accept credit card payments – it is usually possible to use a 0% purchase credit card for any purchase.

It is also possible, but not necessarily advisable, to use a 0% purchase credit card to withdraw cash. The interest charged for withdrawing cash is usually extremely high. The same expensive fees are also likely to be charged if taking other types of cash advances, which can include buying travel money, or gambling.

Some 0% purchase credit cards also allow balance transfers and money transfers, but the interest-free periods can be shorter, and the fees potentially higher, than if opting for a credit card specifically aimed at these types of transaction.

Usually, credit cards may be used to purchase goods and services and for transferring balances from other cards or debts to the credit card. In some cases, credit cards offer promotional low interest rates or 0% interest rates for balance transfers or purchases for a specific time period. There are some credit cards that have other 0% balance transfer and 0% purchase offers.