0% Purchase Rate Credit Cards
Featured 0% Purchases Credit Card
The ANZPlatinum is a very competitive low interest credit card offer. Having a 0% purchase rate can be very helpful – you can make your purchases now, and not have to pay any interest on your purchases till later.
- $0 annual fee for the first year( $87 thereafter) annual fee
- 0% p.a. for 6 months (reverts to 19.24% p.a.) on purchases
- 0% p.a. for 6 months on balance transfers
- Cash Advance Rate of 20.99% p.a.
- 55 days interest free
- Minimum Income Requirement of $50,000 p.a.
0% Purchase Rate Credit Card Comparison
0% purchases cards are a great way to finance a little short-term spending where the balance of any purchases made can be paid off within the offer period.
Table of Contents: Guide to Rewards Credit Cards
- Which is the best 0% purchase rate credit card?
- How do 0% purchase rate credit cards work?
- How to compare 0% purchase rate credit cards
- How to use 0% purchase credit cards
How Do 0% Purchase Credit Cards Work?
A 0% purchase credit card is a credit card that has an interest rate of 0% applicable to purchases for a certain period of time. Six months would be good on such an offer, although offers come and go so it is advisable to do a bit of research before you finally make an application.
This credit card is ideally suited to anyone who has a large purchase, or perhaps a number of purchases, coming up that they know cannot be paid for in one fell swoop. Here, a 0% purchase credit card allows the customer to buy now and pay later, and only pay the original cost of the item(s). To do this on any other card would make you liable for the ongoing rate of interest, which may be up to 20%. Purchases made in-store, over the phone or via the Internet are all included in the 0% purchases offer, however, before you get carried away, your attention is drawn to the “notable exclusions” section further down.
Budgeting for a 0% purchase card:
You must be very aware of what the ongoing rate of interest is once the offer expires, and how it will affect any unpaid balance you may have remaining. To use a 0% purchase credit card in the perfect way, you should be looking to pay off the debt just before the offer period expires. In this way, you will have escaped paying interest for the longest time, which will have kept your cash in your account, hopefully earning interest for you – although in the current economic climate that may not be very much.
Clever budgeting is therefore essential if you take a 0% purchase credit card. This is especially so if you are paying an annual fee for your card. If you are only obtaining a 0% purchase card for the offer period, and have no need of it beyond that time, then it stands to reason that an annual fee for your card will negate some of the benefits you hoped to gain in not paying interest. Here is where you will need to do a few sums. If you miscalculate the length of time it will take to pay off your purchase(s), and you move into regular APR territory, then you can quickly start to nibble away at any earlier advantage you may have gained.
The 0% offer period:
As mentioned at the beginning, six months would be a fair time to enjoy this 0% offer, although many will be less than this – perhaps three months. The danger with the lesser period (especially bearing in mind any fee) is that ninety days can pass very quickly, so you need to make certain your finances are sufficiently ordered that the debt is paid in time.
The double offer trap:
Quite often with a 0% purchase credit card will you see another offer made in conjunction; one for a 0% balance transfer. There are a few issues to be aware of here. You may find that whilst your 0% balance transfer last for six months, your 0% on purchases lasts for only three months. Your credit card provider will have their own rules as to how they apply your repayments to any outstanding debts at the same rate of interest. Within the first three months where both the balance transfer and purchases are at 0%, your repayments may be split half and half between them, or proportionally according to the relative size of each.
Once your purchases offer comes to an end, therefore, there may well be an amount on those early purchases that is still outstanding, and that amount will then revert to the regular APR. Now, according to the “adverse order of payments”, the loan at the lower rate of interest will be paid off first, and not until it is paid off completely will the debt at the higher rate be touched. Your more expensive debt is then effectively trapped behind your balance transfer. If the customer does not realise this and actually continues making purchases at the regular APR, they are only compounding the problem.
The answer with a double 0% offer is to work out which one of these offers you want the most, then stick with that as its solitary use. It is possible to juggle the two, but care must be taken, and you must be pretty disciplined and sure of your projected finances.
Notable exclusions with the 0% purchases credit card:
Cash transactions will not only be excluded from the 0% purchases offer, but you will usually be hit by an interest rate even higher than the regular one for purchases, and they will be applied the moment you make the transaction – they do not benefit from any interest-free days feature on the card. Cash transaction include cash withdrawals at ATMs, cashback at merchant locations, buying foreign currency or travelers cheques, making money transfers, and gambling transactions.
A 0% purchase credit card can be a fantastic way of getting an interest-free, short-term loan, but you must remember the pitfalls, and you should always read the Terms & Conditions to know exactly how the card will work.
How To Compare 0% Purchase Credit Cards
This article will aim to provide you with some guidance when you are seeking to compare 0% purchase credit cards. If this is your aim, then well done, because, according to this year’s Australian Consumer Credit Card & Banking Survey, only 6% of Australians actually bother perusing a credit card comparison site before making an application, and nearly 60% only apply to their own bank.
So, what is the purpose of a 0% purchase credit card, what should it not be used for, and what are the main points to be looking out for when making a comparison?
0% purchase credit cards are for:
A 0% purchase credit card is a credit card with an interest rate of 0% applicable to purchases for a certain period of time. A 0% purchase credit card can therefore be a fantastic way of getting an interest-free, short-term loan. This can be three months, six months, or occasionally longer. This credit card is best-suited to anyone who has a large purchase to make, or several smaller purchases, but they have calculated they will not be able to cover the payments immediately, and may instead require a few months to do so. The one large purchase could a domestic appliance, or you may want the card for some Christmas shopping.
A 0% purchase credit card will allow you to make these purchases when they are needed and allow you some leeway to pay them off at no extra cost. Your existing credit card, if you have one, may have an interest rate of up to 20%. When you compare 0% purchase credit cards to one at that higher rate, the benefits of shopping at 0% are blindingly obvious. This will include purchases made in-store, over the phone or via the Internet.
0% purchase credit cards are not for:
Cash transactions are excluded from any 0% purchases offer, and you will also be liable to an interest rate even higher than the regular one for purchases. Plus, that high rate will be applied from the moment you make the transaction because they do not benefit from any interest-free days feature you may have on the card. The most obvious cash transaction is a cash withdrawal at an ATM, but also included are cashback at merchant locations, buying foreign currency or travelers cheques, making money transfers, and gambling transactions.
Key points when you compare 0% purchase credit cards
There are several important considerations when you compare 0% purchase credit cards:
The length of the 0% offer period
This is of the utmost importance, and very clearly the longer the 0% period lasts, the better for you. This period will be crucial in your gauging how effective this offer will actually prove. You will have to consider the total amount of purchases you know you will make, or are likely to make, and how quickly you believe you can pay them back. This requires some straight talking with yourself; you must be honest. If you have been notoriously lax in making your repayments in the past, how likely is it now that you will be able to maintain a strict repayment budget to fully clear your debts before the offer expires? A 0% offer for three months is around ninety days. That’s not a great deal of time if you’re prone to woolly financial thinking.
The regular APR:
You must be acutely aware of what the ongoing rate of interest is once the offer expires, and how it will affect any balance you may have remaining at that time. Obviously, as with any credit card, when you compare 0% purchase credit cards you should be looking for the lowest regular APR, provided this benefit is not compromised by poor features elsewhere. Your intention should be to clear your debt just before the offer period expires so that you will have escaped paying interest for the longest amount of time, and instead you will have kept your cash earning interest in your own account. In this way, you will have gained in two ways.
Your ability to budget to the specific offer:
It is worth mentioning again the importance of budgeting. If you are uncertain whether you will be able to pay off your debt within the offer period, maybe you shouldn’t be looking to compare 0% purchase credit cards, rather you should be considering a credit card with a low ongoing rate for purchases, which you can find around the 10% APR mark. If you do miscalculate the length of time it will take to pay off your purchases, you could be caught out. Consider: are you better off paying zero percent for six months, then 18% for an unspecified period of time, or would a low ongoing rate of 10% suit you better? For you to know the answer, you will need to be able to quantify that period at 18%, and this will also be affected by the presence or otherwise of an annual fee. Budget and calculate. Budget and calculate. Then do it again.
How can I invalidate my 0% offer?
This may sound like a daft question. After all, why would you want to? This is plainly not a suggestion as to how you should proceed, rather this is one of those questions you may prefer not to ask when you compare 0% purchase credit cards because it may seem like you’re putting a negative spin on something you view as wholly positive. However, you ought to check the fine print to see if there are any ways in which your actions, or inaction, might invalidate the offer. These might include missing a payment, or making one late, or exceeding your credit limit.
The brother-sister act:
Quite often with a 0% purchase credit card will you see another offer made in conjunction; one for a 0% balance transfer. There are a few issues to be aware of here. You may find that whilst your 0% balance transfer lasts for six months, your 0% on purchases lasts for only three. Your credit card provider will have their own rules as to how they apply your repayments to any outstanding debts at the same rate of interest. Within the first three months where both the balance transfer and purchases are at 0%, your repayments may be split half and half between them, or proportionally according to the relative size of each. This means that once your purchases offer comes to an end, there may well be an amount on those early purchases that is still outstanding, and that amount will then revert to the regular APR.
According to something called the “adverse order of payments”, your loan at the lower rate of interest will then be paid off first, and not until it is paid off completely will your debt at the higher rate be touched. Your more expensive debt is then effectively trapped behind your balance transfer, and continues to accumulate that high rate of interest until such time as you pay off your transferred debt. If it happens that the customer does not realise this is the way things work and actually continues making purchases at the regular APR, they will only compound the problem. Although you may count this extra balance transfer offer as a boon when you compare 0% purchase credit cards, it is actually something that is best avoided. That doesn’t mean the double offer should rule out a certain card, only that you should use the card for one purpose or the other, to keep matters simple.
Fees
Is there an annual fee for your card? If you are only obtaining a 0% purchase credit card for the purchases you make in the offer period, and you will have no need of it beyond that time, perhaps because you have an existing card at a lower ongoing rate for purchases, then any annual fee for your new 0% card will clearly wipe out some of the benefits you hoped to gain in not paying any interest. In fact, if you only use the card for a period of three months, that annual fee is effectively four times as expensive for the use you have made of it.
Additional features:
A few other points to clarify when you compare 0% purchase credit cards:
- Check that there are interest-free days included. This is normal in the industry, and you will find them up to fifty-five days. Although this will not be relevant for the 0% offer period, it may become so if you plan to make any future purchases once you clear your initial 0% debts.
- How does any reward scheme operate? Make sure it is free.
- Are there are perks such as purchase protection? These are more usual on more prestigious gold or platinum cards, but you may be surprised.
Final checklist:
- How long is the offer for?
- What is the regular APR?
- Is a balance transfer going to cause problems?
- What is not included in the 0% offer?
- What is your credit limit?
- What are the other card features?
- Can you always pay your minimum amount?
How To Use 0% Purchase Credit Cards
Your 0% purchase credit card is a short-term, interest-free loan. Provided you view it in these terms, you will be taking full advantage of the offer. These are the main points that you must take into account when you take possession of your 0% purchase credit card.
Don’t delay, spend today!
As much as reckless spending is not to be encouraged on any credit card, if you have applied for a 0% purchase credit card it must be assumed you are set on making the odd purchase or two. That being the case, you need to do your spending as early as possible, especially if the card is for the purpose of one large purchase.
The 0% part of your 0% purchase credit card only lasts for a limited amount of time, which may be three or six months. The clock does not start ticking on that period when you make your first purchase, it starts when your card is first activated for use. There is no point taking a card with a six month 0% offer in August if your intention is to hit the January sales with it. Having said that, the cardholder must be sensible. A 0% purchase credit card will only work if you use it only for those purchases you originally planned. Having a what-the-hell moment and splashing out on whatever takes your fancy, simply because it’s at 0%, is a recipe for financial heartache. Whatever you buy will only be at 0% if you are able to pay everything off before the offer period expires and a much higher regular rate of interest kicks in.
Statement time
Although it is highly unlikely anyone is suffering this particular delusion, it has to be mentioned just to be on the safe side: a 0% purchase credit card for six months does not mean the first payment you have to make is in six months. You will continue receiving a statement each month, and there will be a minimum payment requested from you by a certain date, normally within a couple of weeks or so. This minimum payment is more accurately a demand than a request. This is the amount you must pay to keep from falling into default and possibly losing your right to keep your 0% deal. Equally, this payment is the minimum; you can pay more. In fact, you are strongly advised to pay more to make certain your budget keeps on track for clearing the full amount before the offer period expires and the regular APR comes into effect. The only time this may not work in your favour is if you are hoarding your cash in a high-interest account (remember them?) and you plan to squeeze every last cent from it before you finally withdraw your cash to pay off your debt.
Don’t do it
In your delirium at having one over on your credit card provider, you should not forget there are certain pitfalls to avoid with a 0% purchase credit card. The most obvious one has already been discussed, namely …
Not paying off your balance in full within the offer period:
The interest rate that kicks in at this point may be one of the highest rates going.
Avoid cash transactions like the plague:
Cash transactions cover more than just withdrawing cash from an ATM; they also include getting cashback at a merchant’s cash register, buying foreign currency or traveler’s cheques, and gambling transactions. These will never be subject to your 0% purchase credit card offer, and they will actually be hit with a higher rate than the regular APR for purchases, and that rate will kick in the moment the cash is in your hand – there is no interest-free days feature applied to cash transactions.
Be wary of 0% balance transfer deals on the same card:
Whilst your 0% balance transfer deal may last for six months, your 0% on purchases may last only three. Your credit card provider will have their own rules as to how they apply your repayments to any outstanding debts at the same rate of interest, but once your purchase offer comes to an end there may well be an amount still outstanding on those early purchases, and that amount will then revert to the regular APR. Then, according to something called the “adverse order of payments”, your loan at the lower rate of interest will be paid off first, and not until it is paid off completely will your debt at the higher rate be touched. Your more expensive debt is then effectively trapped behind your balance transfer.
Don’t push your luck:
Your credit card provider is out to make some money. That 0% purchase offer will catch some people out, and you don’t want to be one of them. Two things you should never do is be late with your repayments, or exceed your credit limit. If you do either of these, you can be fairly sure that your 0% purchase credit card will quickly become a regular APR credit card with rule-breaking fees imposed.
The key to successfully using a 0% purchase credit card is to budget carefully, not get carried away with purchases beyond your original to-buy list, pay off your full balance within the offer period, and avoid making the mistakes that could prematurely cost you your 0% deal.
Financing Short Term Purchases with 0% Interest
That’s the benefit of these cards in a nutshell. For this to be fully understood, we need to examine what’s going on behind that attractive banner rate. Only then can we know exactly how to take full advantage of a 0% purchases card.
A 0% purchases card is different to a 0% balance transfer card, although they often appear under the same offer. This is where you need to be careful if you want to ensure you use this to your benefit.
First of all, the 0% rate on purchases is a limited time offer, not an ongoing rate. If only …
This means that any purchases you plan to make on that card need to be made quite quickly. That’s not to say you should get a 0% purchases card with the intention of creating a huge balance for yourself – that’s the way of the fool. It does mean that if you get this card because you need to make a large, necessary purchase, it should be done as soon as possible to allow yourself the full offer period at 0% interest, therefore giving yourself the maximum time to budget for a full repayment before the period expires. Bear in mind that the 0% rate will be in effect from the moment you receive your card, not from the time you make your first purchase.
If you can use your 0% purchases card in this way, then you are giving yourself an interest-free loan for perhaps six months, or for as long as the offer lasts. That’s a deal worth having. The trick is to make certain your balance is paid in full by the time the offer expires, or your rate will revert to the regular rate of interest, which could be as much as 20%.
The pitfall of the 0% purchases card:
As a 0% offer on purchases is normally in conjunction with a 0% balance transfer offer, you need to exercise caution. Your 0% purchases card should not be used for both of these. Usually, the 0% purchases rate will be for a shorter period than the balance transfer offer. If your 0% balance transfer period is six months and your 0% purchase period is three months, any purchases made will then revert to the regular rate of interest. This is where things can get ugly, because the balance of your purchases will then not be reduced by a single cent until the transferred amount has been completely paid off. With credit cards, the debt at the lower rate of interest is always paid off first. It’s there in the fine print.
Your intention with a 0% purchases card must be to play the credit card provider at their own game. They’re not offering something for nothing. This offer is made because there’s a trap to fall into. Navigate around that trap, and it’s a great deal. Use the card as an essential short-term loan, and finish paying it off before their offer period ends.
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