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0% purchase cards compared

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There are a host of 0% balance transfers out there to give people a break from their interest payments, but what reward to those people get who always pay their debts off? (Updated 12/03/10)

Compare other 0% on purchases credit cards.

It didn’t take lenders long to get wise to the tactics of the “rate tarts” who continually moved their debt to avoid paying it off, adding fees of up to 3% for anyone wanting to move their balance to a new card, but those with an empty credit card, or no credit card at all, have nothing to stop them from taking advantage of some of the great ways to save with a zero per cent purchases card.

• Why go for a 0% purchases card?
• What are the pitfalls of a 0% purchases card?
• Which card for me?

Why go for a 0% purchases card?

Only people who are already clear of their current debt should go for these cards. If you’re already carrying around a large financial burden, you should be looking to pay it off while minimising the interest you pay on it, rather than doing any further spending. Click here to read our guides to balance transfer cards and lifetime balance transfer credit cards that will help you to clear your debt.

If you are certain that you’ll be able to pay the full balance off before the promotion ends, you can use 0% on purchases cards for large purchases - much like an unsecured loan - but without having to pay any interest.

Additionally, if you are disciplined and sensible with your money, you can use these cards to, at the very least, get discounts on things you already buy, or at the most, you can make actual physical money from them.

The best cards now offers ten months interest free on purchases.

The more complicated way of making money from these cards involves being vigilant and ensuring you know exactly when your promotional 0% offer ends. You do all your normal spending on your zero per cent purchase card, and then move the money you would have spent on these items into a high interest savings account or ISA. When your promotional period ends, you simply take the money from your savings account to pay the credit card off, and you’ll be left with at least a few hundred pounds in interest from the savings account.

However, if the interest rate on the account is low or dependent on an annual bonus, the gains can be limited.

View the leading savings accounts.

This might sound simple, but it really shouldn’t be taken on lightly. The interest you pay once your 0% promotion has ended will be in the region of 17 per cent, so you need to make sure the balance is completely clear by this date.

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What are the pitfalls of a 0% purchases card?

Firstly, make sure you know exactly what you bank considers to be a “purchase”. While normal spending will fall under the zero per cent offer, cash advances - taking money out at a cash point, online gambling, or in some cases, buying gift vouchers won’t be covered in this section. You’ll start paying interest immediately and at a higher rate too. And these purchases will be the last things to be paid off - so they’ll sit in your balance accruing interest for as long as possible.

Many credit card companies that offer zero per cent on balance transfers also offer a period of interest free purchases to encourage customers to continue to spend. This is a bad decision for anyone already in need of a balance transfer card, but in addition to this, the purchases you make during that time are unlikely to end up interest free, and here’s why.

Payments made against credit card debt are tiered and you’ll pay off the cheapest or “free” debt first. So if you transfer £3,000 to a zero per cent balance transfer card, and find that you also have three months of interest free purchases, and spend on it, all payments you make will fist go against the £3,000 transferred balance. So unless you can pay this off before your 0% on purchases offer ends - which is unlikely - you’ll be paying around 17 per cent on the things you’ve bought for months before you can make a dent in them.

So remember - never use a zero per cent purchases card for balance transfers even if it has a zero per cent offer.

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Which card for me?

If you’ve read over the pitfalls and benefits of zero per cent purchase cards and have decided that this is the right choice for you, check out the best 0% purchase credit cards to compare promotion lengths, rates after introductory deals have ended and sign up.

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