Are 0% interest cards right for you?
Depending on your needs, a 0-interest card might be a suitable option for you. You may be wanting to make that big purchase; book a holiday you had planned for last year or need to pay off unexpected bills. Whatever the reason may be, these cards may provide be useful and therefore could come in handy for you.
Sometimes referred to like 0% purchase or interest-free cards, these credit cards allow you to make upfront payments and spread the cost of your purchase over a period without paying any interest. If you clear the debt before the interest-free period ends, you will pay no interest. However, after the interest-free period has ended, the credit card will revert to its standard purchase rate also known as the APR rate.
Even if you do not pay off your balance in full within the month, it could still be an interest-free period if you pay before the duration is up. For example, if you were to make a purchase of £1,400 on your interest free card and had an interest free period of 12 months, you could pay £120 every month and still not be charged any interest. However, Whatever balance you might have outstanding after the interest-free period will be charged at the standard interest rate (or APR).
Depending on your credit score you’ll be offered a different time length of how long your interest-free period lasts. When lenders check your credit report, you may not be given the same duration period that was advertised, this goes for the interest rate too.
Know your limits
Purchase cards can be a great tool if you know you will pay off your debt before the interest-free period ends. However if you have difficulties keeping up with your repayments, then there might be some things to be aware of. The minimum payment is the least that should be made to pay back your debt before your due date. Missing these payments may cause more serious debt or even worse losing your 0% purchase rate offer.
- The introductory period is usually to attract new customers.
- You could lose your fixed interest rate if you miss or are late with repayments.
Just like all credit cards, the 0% purchase card will have a credit limit. For best practice, it’s important to remember to keep your credit utilisation below 30%.
Find out more about credit utilisation here
When searching for a purchase card, it’s good to compare many options and to look out for the necessary information that’s important to you. This may be the APR rate, the length of the interest-free period or even who the company is with. Your aim should be to reduce your debt so always be on the lookout for options that will save you the most money in the long run.
Now that we are aware of what 0% purchase credit cards are, let’s get started on what steps you would take to get one. If your clear on how this happens already you could get started now by logging into our app here -
Step 1) Eligibility check
- When completing your eligibility check there’s a range of factors that are considered before you’re offered a product. These factors are:
- Your income
- Credit utilisation history
- Recurring expenses
- The amount of debt you are dealing with
Step 2) Logging in to Clearscore
Log in to the Clearscore app via your device and see what credit cards you could be offered atIf you want to avoid having many searches on your credit card report, have a look at the pre-approved offers.
Pre-approved offers mean the lender has told us you’ll be accepted for that product if you pass their fraud checks, and your application details are correct.
The higher the pre-approval rate, the higher the chance of you being accepted for the product.
- Not only does this give you more certainty when applying, but this could also mean fewer hard searches on your credit report as it saves you from applying for many products, therefore, protecting your credit score. Find out more about pre-approvals here
Step 3) Applying
Apply for the offer, most offers you apply for may ask you for specific information to finish your application in one session. You should have these details to hand:
Payslips for the last 3 months.
Information about your regular expenses.
Offers could take up to 5 business days to be approved, so it’s important to apply ahead of time.
If you fill out your information through Clearscore, most of your applications will be pre-filled if you have entered your details correctly before. (Remember, if you're taken to a third-party site you may have to fill these out details again.)
Step 4) Purchasing
Purchase using a credit card. Lenders want to see if you're responsible for using your credit card therefore it’s all about balance. Spending too little or too much can show creditors that you’re rather not showing any evidence of good use or you’re showing that you cannot manage credit.
Try to remember to always pay off the debt in full before the duration period finishes. This will save you from paying any interest at all!
We hope this article has been helpful. Remember, 0% interest cards can provide very useful if you manage your credit well. Your main points to remember are:
Making sure they're right for you, it’s important to pay off the debt within the offer period to avoid any interest.
Always be sure to make the minimum payment, missing payments could lead to more serious debt, or the 0% offer being revoked.
If you’re looking to keep the card, be aware of the APR rate to make sure you can keep on top of payments.
Make sure to compare all your options to find the best credit card suited for you.