Dos and don’ts of 0% credit cards

If you’ve taken a 0% credit card recently – or are planning to any time soon – doing your homework could make the difference between being debt-free and organised or in more trouble than you started with.  So check out our dos and don’ts of interest-free plastic.

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…shop around for the longest 0% window

If you’re looking for an interest-free credit card to spread the cost of a large purchase, it makes sense to look for the one that offers the longest 0% window. Currently this is 18 months.


Santander’s 123 Credit Card and Credit Card for Purchases both offer this duration, alongside Tesco Bank with its Clubcard Credit Card for Purchases. Once the honeymoon period is over on these cards they jump to representative APRs of 18.9%, apart from the 123 card which charges 16.5%.

If you’re looking for a balance transfer card though, you will have to factor in the transfer fee alongside the 0% duration. While Barclaycard’s Platinum Credit Card with Extended Balance Transfer comes with an unparalleled 31 months at 0% for example, it also charges a high transfer fee of 2.99%.

If you don’t need that long to pay down your debt, you may be better off going for either of the Lloyds Bank Platinum Credit Card or the Bank of Scotland Platinum Balance Transfer Credit Card, both of which offer 15 months at 0% and charge a transfer fee of just 0.7%.

…seek out extras

Some providers also offer added incentives on their 0% purchase deals. Santander’s 123 card – which is already a joint market leader for its 18 months 0% on purchases – also offers staggered rates of cashback. The card comes with an annual fee of £24, though it will be waived for the first year if you hold a Santander 123 account.

The American Express Platinum Cashback Purchase Credit Card is also worth a look as this offers 16 months at 0% on purchases before jumping to a representative APR of 18.7% (variable), and gives cashback at an ongoing rate of 1.25% on virtually everything you buy.

…set up a direct debit

If you’re not the most organised of people, it can be easy to miss a credit card payment – which can be bad news as I explain further down this article. So set up a direct debit to solve the problem.

With a 0% balance transfer card, you should set up the direct debit for the monthly amount you will need to clear the debt within the 0% period – making sure also you don’t spend on the card.

If you have a 0% purchase card, it won’t matter if you don’t clear your balance every month within the 0% window, as that’s what they are designed for. But setting up a direct debit for at least the minimum will save you a job every month.

…use to buy big-ticket items, even if you have the cash

Paying for an item using a credit card offers you protection should the goods or services you bought be damaged, faulty or even not turn up at all. The same protection is not in place for cash or debit card purchases.

Your credit card will protect you for items costing between £100 and £30,000 under the Consumer Credit Act, while the Consumer Credit Directive extends this from £30,000 to £62,260.

The best news, though, is that even if you just use your card to pay the deposit on an item, as long as its total cost is between £100 and £62,260, you’re protected. Find out how our editor-in-chief, Clare Francis, benefitted from this protection when her kitchen company went bust.


…take the card your bank tries to sell you

Your bank may contact you from time to time with credit card offers via the post. But there’s a good chance that this deal will be a long way from the best on the market. Make sure you compare the whole range of both 0% purchase cards and 0% balance transfer cards before making your choice. 

…miss a payment

Interest-free credit cards are a great way to spread the cost of a major purchase or pay down existing debt. Miss a payment though and things will soon start to unravel.

Not only will it put a dent in your credit score, but the provider will withdraw any interest-free arrangement putting you on its APR instead (typically around 18 to19%). You’ll also pay a penalty fee for its trouble.

…have a balance left at the end of the 0% period

Whether it’s a purchase or balance transfer card, make sure you are not carrying a balance after the 0% window ends or your will start being charged the card provider’s APR.

As an example, if you bought a £3,000 car using the Santander Purchase card and paid off £75 a month, this would leave you will a balance of £1,650 when the 18 months at 0% is up. If you carried on making this £75 payment in month 19 when the 18.9% APR kicks in, £26 of that payment would be eaten up in interest. 

…spend on a card designed for balance transfers

If you’ve switched your debt across to a card designed for balance transfers, try to avoid spending on it. Any 0% offer on purchases is likely to end before the 0% period on balance transfers which can lead to confusion. What’s more, even if you clear the cost of your purchases, you will still be charged interest on them as the overall balance is never at £0.

Bu there are cards that offer 0% on both purchases and balance transfers for equal duration. The Halifax All In One Credit Card for example, comes with 15 months’ interest-free on both purchases and balance transfers with a low fee of 0.8%. The representative APR after this is 17.9% (variable).

Alternatively, the Sainsbury’s Nectar Credit Card comes with a 16-month interest-free period on purchases and balance transfers, subject to a 3% fee. The representative APR after that is 16.9%. It’s also handy for regular Sainsbury’s shoppers as you can collect Nectar points quicker.

If you don’t qualify…

If you don’t have a squeaky clean credit score, you probably won’t qualify for credit card deals listed in this article – but you still have options. 

Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.


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