Guide to 0% balance transfer & 0% purchases credit cards
These offers are about as exciting as credit card deals get. A help for those credit card customers in need of a great deal with interest relief on their debt.The purpose of a zero percent balance transfer and zero percent purchases credit card is to make paying off an existing credit card debt easier, and also allow for interest-free purchases to be made on the same card. Zero percent interest is an offer for an introductory period — usually for six months or so.
This guide is designed to help you make the best comparison possible to find you some of the lowest interest rates on the market and to help you to avoid common mistakes made by credit card customers. On that, we are pretty comfortable in asserting that 0% is the lowest interest rate possible. Prepared to get the feel-good factor with the lowest interest rates possible.
After this time, the For the sake of argument, we will assume that the offer periods for the 0% balance transfer and the 0% purchases are both six months, and that they run concurrently. If that is the case, then this is a great product, because they work hand in hand to give you one of the best offers available for people making purchases on a balance transfer credit card.
0% Purchase & Balance Transfer Credit Card
The St.George Platinum Credit Card has a offer on both balance transfers and purchases. The low interest rate combined with Platinum Visa privileges.
- $89 p.a. annual fee
- 0% p.a. for 12 months (reverts to 15.99% p.a.) on purchases
- 0% p.a. for 9 months on balance transfers
- Cash Advance Rate of 21.49% p.a.
- 55 days interest free
0% Balance transfers & 0% Purchases credit cards comparison
- Compare 0% balance transfer & 0% purchases credit cards
- How do 0% balance transfer & 0% purchases credit cards work?
- How to compare 0% balance transfers & 0% purchases credit cards
- Types of 0% balance transfer & 0% purchases credit cards
- How to use a 0% balance transfers & 0% purchases credit card
How do 0% balance transfer and purchase rate credit cards work?
To understand what this all means, we need to look at what can happen when the 0% offer is only on a balance transfer.
Making purchases on a balance transfer trap. Balance transfers are a great offer — their popularity is a testament to this. But one trap some people can fall into on a regular balance transfer card is by using it to make purchases. The reason purchases are a problem is that there are no interest free days on credit cards when the balance isn’t paid in full each month. In short, you’ll be paying interest.
For every credit card purchase made on a standard balance transfer credit card, the purchase rate of interest accrues on each purchase from the day of the transaction until the purchase is fully repaid including the interest component. This isn’t an ideal situation for people who are making an effort to get on top of their debt by taking out a balance transfer credit card.
The trap is solved with 0% purchases. The combination of a 0% balance transfer and 0% purchases card solves this consumer pitfall by eliminating the possibility for punters to be stung with interest on purchases for six months.
For cardholders on a normal balance transfer offer, the latest credit card reforms require banks to allocate payments to higher-interest debts first. It works this way: the debts on your credit card will be paid off in a certain order of the highest interest rates first. Therefore, customers who thought they were putting a massive dent towards their credit card debt are paying off their new purchases first and are being less effective at paying off debt than they intended.
The joy of a 0% balance transfer and 0% purchases credit card
How long can I get on this? Australia has quite a small market in 0% balance transfer and 0% purchases which means that the longest you can expect to get this offer for is around six months. It will take consumer power to create demand and an incentive for longer deals
Save on annual fees! Best practice for using a regular balance transfer credit card is to keep another credit card open to make purchases on, so that you still get interest free days. However, the great feature of a card with 0% interest on both balance transfers and purchases means that credit card users only need to keep the one credit card open and therefore can save the value of one whole annual fee — which is a neat little cost saving benefit.
Things to watch out for
- Revert interest rates.At the end of the promotional offer, customers need to be aware of the spike in interest to expect. If a balance isn’t going to be paid by that time, it is a good idea to make other plans or at least know what interest to expect and budget for. Most likely, the balance transfer amount will revert to the higher cash advance interest rate, while the purchases will revert to the purchase interest rate.
- Cash transactions. Never a good idea on any credit card, and often unlikely to be covered by any 0% deal. Even if they are, there will still be a cash advance fee for every cash advance transaction. This is an extra charge of around 2-4% of the transaction amount and will accrue. If the cash advance fee is unpaid by the next statement due date, it will accrue interest as well at the cash advance rate.
- Different length offer periods. Length of these offers can vary, so it is worth deciding from the outset what your plans are when the period ends and whether a longer balance transfer and purchases period will suit you even if the offer interest rate is higher than some of the shorter, zero percent offers.
- Annual fee. Check this is not too much higher than average. A little higher than normal may be okay for the benefits you’re gaining from your 0% balance transfer and 0% purchases offer.
How to compare 0% balance transfer and 0% purchases credit cards
It is very important that you compare 0% balance transfer and 0% purchases credit cards, to identify the type of card that is most suited to you.
We’ll examine the main features of these cards, what you should be looking for, and why you must understand how certain factors can work against each other.
Types of 0% balance transfer & 0% purchases credit cards
No two 0% balance transfer and 0% purchases credit card offers are the same. These are offered on cards that are all slightly different. Annual fees, revert interest rates and the class of card, whether it be classic or platinum are different identifiers for the type of credit card.
A rare beast to carry this type of offer. Generally a only trimmed-down rewards cards will have the full 0% on balance transfers and 0% on purchases. So you may expect to get complimentary insurance and some other helpful, low-key privileges. But that is generally about it.
Reduced annual fee for first year offer
Even a cursory glance at the above comparison table will show that many of the 0% balance transfer and 0% purchase rate offers have a reduced annual fee for the first year. This can be very helpful for customers who wish to keep their upfront costs down while they knuckle down to payoff their debt.
Platinum credit cards are class, or category if you will, of credit cards that are targeted at higher income customers than classic credit cards and often require a sharp credit record. In return, customers get higher credit limits as well as better extras, such as complimentary overseas travel insurance.
Classic credit cards are a good option for people on a lower income than is required platinum credit cards. They are a basic level of product and therefore tend to have lower annual fees than platinum credit cards.
Low rate cards
Low rate credit cards are a pretty strong offer in the 0% balance transfer and 0% purchases scene, as purchases on the cards revert to what is usually a pretty low purchase interest rate.
How to use 0% balance transfer & 0% purchase rate credit cards
Your 0% balance transfer and 0% purchases credit card will be a huge boon during its initial offer period, but only if you make effective use of it. Here are the main dos and don’ts of using this particular credit card to keep in mind before you apply:
The dos of 0% balance transfer and 0% purchases cards
- Make your balance transfer quickly. Your introductory period may last six months, but your opportunity to make your transfer is also limited, possibly to the first thirty days after your card is activated. Otherwise the promotional rate will be lost. Besides which, the longer you leave it the less time you will enjoy avoiding any interest. The best way to ensure you take full advantage is to transfer your balance during your card application.
- Understand how to make the transfer. As mentioned already, the simplest and best way is whilst making your application, where there will be a dedicated page for this purpose. Otherwise you can use the online facility as soon as you receive your card, or use telephone banking, or even take the old-fashioned route and use the paper forms that will arrive with your card.
- Pay off your balance in good time. If your deal is for six months, that’s not an awful lot of time. Make sure you are budgeting like mad to ensure the balance on your 0% balance transfer and 0% purchases credit card is paid off in full before the offer period expires. You will be charged the regular rate of interest on any unpaid balance, which could be as high as 20%. However, if you can’t get there by the cut off date, it may be worth considering balance transferring again to another balance transfer credit card.
- Don’t think this can become a habit. Making one 0% balance transfer after another to avoid paying your debts will be noted in your credit history. Your credit rating may drop due to your regular credit applications, and credit card providers may well read into your habits and reject applications from you. Plan to eventually get off the balance transfer bandwagon.
- Don’t make any cash transactions on your 0% balance transfer and 0% purchases card. Cash transactions aren’t often included in 0% promotional offers, and when they are, they still carry the very expensive cash advance fees.
Your Frequently Asked Questions are answered.
If I make a purchase during the 0% balance transfer and 0% purchases period, what rate of credit card interest am I charged?
During the 0% purchases offer period, purchases won’t incur interest.
However, after the 0% offer period ends, you will be charged the purchase rate of interest.
This will be charged from the date the transaction takes place if you’re carrying a balance from month to month as interest free days are waived for unpaid balances.
If I don’t pay my balance in full and on time, what happens?
For the 0% offer period, 0% interest is applied for the outstanding balance.
After the offer period, if you don’t pay your balance in full by the statement period, you will not receive any interest free days on purchases you make with the card.
What does the interest rate revert to at the end of the 0% balance transfer and 0% purchases period ?
Purchases usually revert to the normal purchase interest rate on the credit card. Balance transfers however either revert to the purchase rate or the cash rate. To find out what rate your balance transfer will revert to, view the review of the specific credit card on CreditCardFinder.com.au. Or, to get an overview from provider to provider, see our ‘balance transfer revert interest rate guide’.
Do you still have to make any credit card repayments during the 0% balance transfer and 0% purchases period?
Yes, the minimum monthly repayment must be paid each month to stop your card from going into default – if you have a balance transfer promotion charging 1% interest and the minimum monthly repayment is 3% – you’ll be paying 2% off your balance each statement period.
Is there such as thing as a credit card that has a 0% balance transfer and 0% purchase rate and also a $0 annual fee?
Yes, there were such offers at the time of writing. However, offers change from time to time, so the best way to stay up to date with the latest offers from providers is to check our balance transfer comparison page.
Credit card offers:Learn about our information service
|HSBC Credit Card||St.George Vertigo Credit Card||ANZ Low Rate Credit Card||NAB Low Rate Credit Card
0% p.a. for 6 months on balance transfers & no annual fee
0% p.a. for 12 months on balance transfers & low annual fee
0% p.a. for 12 months on balance transfers & low annual fee
0% p.a. until 1 July 2014 (thereafter 13.99% p.a.) on purchases
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