If you need to make a big purchase you can’t afford to pay for outright, a credit card that charges 0% on spending might be the answer.
Don’t take one out if it’s going to encourage you to spend money you don’t have, but credit cards can be useful, not least because they give you valuable consumer protection. And with a 0% credit card, as long as you clear your balance by the time the 0% deal runs out, you won’t be hit with hefty interest charges.
Only borrow what you absolutely need though and steer clear if you know you’re going to struggle to repay what you owe within the interest-free period.
The pick of the 0% credit card deals
There are several cards that won’t charge interest on purchases for the first year or more. Remember that deals change regularly, so it’s worth looking on comparison sites such as MoneySuperMarket.com, uSwitch.com and Comparethemarket.com to find the current best deals.
Some 0% purchase cards that may be worth considering include:
- Marks & Spencer Credit Card Shopping Plus Offer: This card charges 0% interest on purchases for 20 months. After that the interest rate will be 19.9%. Once the introductory period finishes, you can get up to 55 days’ interest free credit when you pay your balance in full and on time each month. You’ll earn one reward point for every £1 you spend in M&S or for every £5 you spend elsewhere (wherever you see the MasterCard sign). One point is worth one penny. A bonus points voucher for 500 points worth £5, when you spend on food, clothing or home at M&S will be sent to you with your new credit card. This card also offers 0% on balance transfers too, as long as they’re made within 90 days of you opening the account. A 2.9% balance transfer fee applies.
- TSB’s Platinum Purchase Card: This card also charges 0% interest on purchases for 20 months, although you may be offered a shorter period of 15 months or 10 months interest-free depending on your circumstances and credit history. After that the interest rate rises to 19.9%. You get up to 56 days interest free after the introductory period ends provided you pay your balance in full each month. It also has 0% on balance transfers for 20 months (or 15 or 10 months) with a balance transfer fee of 2.95%.
- Sainsbury’s Bank Dual Offer Credit Card: The Sainsbury’s Bank Dual Offer Credit Card offers a 20-month 0% introductory offer on both purchases and balance transfers. However, you may be offered a much shorter 12-month 0% period depending on your circumstances. After the 0% period finishes, the card charges interest at 21.9%. If you’re transferring a balance across as well as making purchases with the card, there’s a 3% balance transfer fee to pay. You’ll collect 750 bonus points each time you spend £35 or more on Sainsbury’s shopping with your credit card, up to 10 times in your first two months. That means you can get up to 7,500 points. Outside this offer, you’ll collect three points for every £1 you spend at Sainsbury’s, Argos and Tu Clothing, and £1 for every £5 you spend elsewhere.
If you have a less than perfect credit score
The best credit card deals are usually only offered to those with excellent credit scores, who’ve never missed any debt repayments. If you’re worried your credit score isn’t up to scratch, you can find out how you might be able to improve it here.
MoneySuperMarket offers a Credit Monitor tool which enables you to check your credit score and free of charge using data from credit reference agency TransUnion and offers free personalised tips to help it grow. Experian also has a free service that enables you to sign up and check your credit score with them, while ClearScore’s free credit checking service accesses Equifax data.
If you have struggled with debts in the past, think very carefully before borrowing again. If you’re confident that your finances are back on track, some providers, such as Vanquis and Aqua specialise in cards that can help you rebuild your credit score. They usually offer a low credit limit and charge steep rates of interest, so it’s vital to pay off your balance in full each month.
If you are refused a credit card, don’t make another application for a different card straight afterwards. Any applications you make will be recorded on your credit file, so if you make several in quick succession, lenders are likely to think you’re experiencing financial difficulties. Plenty of lenders now offer online eligibility tools that can tell you how likely you are to have your application accepted without performing a full credit search that leaves a mark on your file.
If you feel like your debts are spiralling out of control, don’t apply for more credit – it’s vital that you seek help as soon as possible. Contact your lenders and tell them you’re finding it difficult to pay back what you owe – they might be able to work out a more affordable repayment plan with you. You may also be able to reduce your other outgoings so that you can pay back your debts. Learn how to cut costs here.
If you need further help, get in touch with one of the charities specialising in free debt advice. These include StepChange, National Debtline and the Debt Advice Foundation. You can find out about your options if you’re in serious debt here.
Have you recently taken out a 0% credit card and were you offered the advertised introductory period? If so, we’d be interested in hearing from you. You can join the conversation on the Money section of the Community forum or leave a comment below.