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0% Purchase Credit Cards FAQ
If you're currently considering a large purchase, or you frequently use your credit card to pay for goods and services, then a 0% purchase credit card could be a great option. These cards allow you to buy big-ticket items and pay off the cost over a specific time period - without any interest. In some cases, when the 0% on purchases period lasts for a significant amount of time, you can effectively borrow money for free, so long as you clear your balance before the interest-free offer ends.
Used correctly, a 0% purchase card can be the cheapest way to borrow - however the focus lies in repaying what you owe before new charges become applicable.
What will my credit limit be?
Your chosen provider should be able to give you an estimate of what your credit limit will be following your application for a 0% purchase card. Most of the time, the amount of credit you're given will depend on your credit rating.
When will I need to clear my balance?
The downside of 0% purchase cards, is that if you go even a few days over the promotional period, your interest rate can explode. This means that you need to calculate repayments carefully to clear your balance before the promotion ends. The typical APR (annual percentage rate) for purchase credit cards is between 18% and 20%, which makes them a very expensive borrowing option if you allow your balance to build.
How can I make repayments on a 0% purchase card?
A good way to make 0% purchases card repayments is to set up a direct debit for at least the minimum payment amounts from the moment your application is accepted. If you miss your repayments, you could lose your 0% deal, meaning your interest rates and repayments will skyrocket. Remember, clear your card balance in full whenever possible as even £1 of balance when the 0% interest rate ends can cause you to pay a full month's interest rate.
Do 0% purchase cards offer payment protection?
One unique benefit of 0% purchase cards, is that unlike with debit or cash purchases, you should receive a level of protection in case your items are faulty or fail to arrive on time. Under consumer protection rules, you can claim back a significant amount of the costs if your purchases don't arrive, or aren't what you expected. For instance, if the airline you booked flights with went out of business, you'd get your money back - even if you only put the deposit on your 0% purchase credit card.
Does my credit score matter?
Yes, the most appealing deals for purchase cards - including those with the longest periods for interest-free payments - are usually offered to people with clean credit scores. Those with restricted credit histories, or poor credit scores may not be approved for a 0% card, or may only be able to take advantage of the 0% offer for a short period of time.
What do I do when my 0% period expires?
If your 0% period expires and you have not completed your repayments, you can either continue to make monthly payments at the new rate of interest, or you can attempt to transfer your remaining debt to a balance transfer card.
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Helpful links for credit card issues
Money Advice Service - The government's Money Advice Service website provides concise, unbiased information on choosing and using credit cards as well as handy tools such as credit card calculators.
The UK Cards Association - The British trade association for card payment companies has an extensive range of guides on their website covering all the types of payment cards available to UK consumers including debt, credit and prepaid cards.
Financial Fraud Action (FFA) UK - The Financial Fraud Action website features important advice on using payment cards safely and securely as well as information on the latest scams.
Financial Ombudsman Service - If you've already made a complaint to your card provider and have not had your issue resolved satisfactorily then the next step is to take up your complaint with the Financial Ombudsman.
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