What Happens At The End Of The 0% Interest Purchases Period?

Information verified correct on September 28th, 2016
balance_transfer_250x250

Find out what happens to your credit card interest rate when the 0% p.a. introductory purchase period ends.

If you have a credit card that offers 0% p.a. interest on purchases, remember that this is for a limited period only. At the end of this period, any outstanding balance on your card starts attracting interest. This interest is typically higher than prevailing interest rates as lenders try to compensate for the initial attractive offering.

How do 0% interest purchase cards work?

With a card that offers 0% p.a. interest on purchases, you can make purchases and not pay any interest as long as you meet some requirements. The time period for this interest offer can vary from one credit card to another, with options typically varying from six to 12 months. If you wish to make the most of the interest-free period, it’s ideal that you pay off the entire balance before the period comes to a close. As soon as the 0% p.a. interest period ends, the account starts to attract interest.

Compare 0% Interest Purchase Cards

Rates last updated September 28th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
NAB Low Rate Credit Card
The NAB Low Rate Card offers 0% p.a. on purchases and balance transfers for 15 months. This card also comes with a low annual fee.
0% p.a. for 15 months (reverts to 13.99% p.a.) 0% p.a. for 15 months with a one off 2% balance transfer fee $59 p.a. Go to site More info
NAB Low Fee Card
Get 0% p.a. on balance transfers and purchases for 15 months.
0% p.a. for 15 months (reverts to 19.74% p.a.) 0% p.a. for 15 months with a one off 2% balance transfer fee $30 p.a. Go to site More info
ANZ First Visa Credit Card - Exclusive Offer
Exclusive Offers to finder.com.au

Enjoy 0% p.a. for the first 12 months on balance transfers and 0% p.a. for the first 3 on purchases.

0% p.a. for 3 months (reverts to 19.74% p.a.) 0% p.a. for 12 months $30 p.a. Go to site More info
Virgin Australia Velocity Flyer Card - 0% Interest Offer
Earn Velocity Rewards points with your purchases and pay no interest with 0% p.a. for 12 months on purchases and 0% p.a. for 6 months on balance transfers.
0% p.a. for 12 months (reverts to 20.74% p.a.) 0% p.a. for 6 months $129 p.a. Go to site More info
St.George Vertigo Visa
Introductory offer of 0% p.a. for 18 months on balance transfers and 1% p.a. for 12 months on purchases, plus a low annual fee.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
Westpac 55 Day credit card
Enjoy a balance transfer offer of 0% p.a. for 16 months, an introductory purchase rate of 1% p.a. for up to 12 months, plus a waived annual fee for the first year if applied by 11 October 2016.
1% p.a. for 12 months (reverts to 19.84% p.a.) 0% p.a. for 16 months $0 p.a. annual fee for the first year ($30 p.a. thereafter) Go to site More info
St.George Vertigo Platinum
A platinum card with a balance transfer offer of 0% p.a. for 20 months and an introductory purchase offer of 1% p.a. for 12 months with an annual fee waiver for the first year.
1% p.a. for 12 months (reverts to 12.74% p.a.) 0% p.a. for 20 months $99 p.a. Go to site More info

Bear in mind, however, that only the outstanding balance attracts interest, not the total amount of all your purchases. For example, if the total amount of your purchases during this period is $5,000 and your outstanding balance when the introductory interest period ends is $2,000, only the $2,000 attracts interest.

While the interest rate at the end of the 0% p.a. interest period reverts to a standard purchase rate, cash advances attract cash advance rates. It is important to remember that there is no interest-free period on cash advances.

Compare and learn more about 0% interest cards here

Back to top

The difference between the purchase rate and the cash advance rate

Just about every credit card involves two kinds of interest rates. The purchase rate refers to the interest you have to pay for purchases you make, while the cash advance rate applies if you use your credit card to withdraw cash. For example, you could use your card to make a purchase of $1,000 and also to withdraw $1,200 from an ATM. Both these amounts will, in all likelihood, attract different interest rates, and cash advance rates are typically higher than purchase rates.

Note: Low cash advance rate credit cards can be helpful when you urgently need cash and need to withdraw funds. learn more here

Back to top

What are the usual conditions that apply?

As with most promotions, such cards require that you adhere to certain conditions in order to take advantage of the interest-free period. If you fail to do so, the offer comes to a close and you have to pay the regular interest rate. Two common requirements include:

  • Not exceeding your credit limit
  • Making minimum monthly payments on time.

If even one payment is late the promotion can expire, so you should be particularly careful about getting your payments in on time.

  • Expert Tip: Remember that when a card offers 0% p.a. interest on purchases, the offer is limited to purchases. As a result, if you use such a credit card to withdraw money (a cash advance), you end up paying a high cash advance rate.
Back to top

How can I benefit from the interest savings? Stoozing and balance transfers:

When you are looking to save money, interest on your funds can be a key element. Here we look at stoozing and balance transfers

Stoozing refers to an act of borrowing money at 0% p.a. interest, placing the money in a high-interest bank account and making a profit owing to the interest earned. If you use a credit card that offers 0% interest on purchases intelligently, you can benefit by using this technique.

Consider the following example. You can afford to buy a high-end gadget by paying cash, but you elect to use a credit card to pay for it instead. The cash you intend to use to pay for the purchase can earn interest until the 0% p.a. interest period on the credit card comes to a close. All the money you make in the meantime, in the form of earned interest, is profit. This practice requires that you maintain discipline and that you keep setting money aside for every purchase you make.

Balance Transfer Offers

Credit card stoozing is not for is not for everyone, so another option is to take advantage of a balance transfer deal. Transferring an existing balance to another card can relieve the pressure of additional payments on interest charges. Ideally you would like to define your objective early, if the objective is to relieve you of the interest repayments so that you are able to repay more of your debts then an option may be a balance transfer.

learn more about balance transfers

When it comes to cards that offer 0% p.a. interest on purchases, they are most effective if you can manage to pay your balance off before the promotional period ends. If not, more the balance you can pay off before this point, the better. Limiting yourself to paying the minimum monthly amount is never a good idea. Given that a number of people successfully manage to clear their balances in the stipulated periods when using such cards, if you use your card smartly you can do as well.

Back to top

Was this content helpful to you? No  Yes

Related Posts

Ask a Question

You are about to post a question on finder.com.au

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Disclaimer: At finder.com.au we provide factual information and general advice. Before you make any decision about a product read the Product Disclosure Statement and consider your own circumstances to decide whether it is appropriate for you.
Rates and fees mentioned in comments are correct at the time of publication.
By submitting this question you agree to the finder.com.au privacy policy, receive follow up emails related to finder.com.au and to create a user account where further replies to your questions will be sent.

Credit Cards Comparison

Rates last updated September 28th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Enjoy a 0% p.a. balance transfer offer for 18 months and also earn 2 bonus Velocity Points in the first 3 months on everyday spend.
20.74% p.a. 0% p.a. for 18 months $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
ME Bank frank Credit Card
Enjoy a low and consistent interest rate on purchases and cash advances, combined with no annual fee.
11.99% p.a. $0 p.a. Go to site More info
St.George Vertigo Visa
Introductory offer of 0% p.a. for 18 months on balance transfers and 1% p.a. for 12 months on purchases, plus a low annual fee.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info

* The credit card offers compared on this page are chosen from a range of credit cards CreditCardFinder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

Ask a question
feedback