How to make a major purchase at 0%

If you are looking to fund a large purchase on a credit card, pay no interest, and spread the cost over several months, there has never been a better time to do so.

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When buying big-ticket items, or forking out for home improvements or an annual holiday for example, a credit card which offers 0% on purchases can be the best option as it provides the flexibility of being able to spend now and pay later.

This can also be beneficial if you’re making numerous purchases – such as buying items to furnish a home – as you don’t have to pay for everything upfront.

Provided you are disciplined, this means you can spread the cost without being charged any additional interest – enabling you to borrow interest-free.

What’s happening in the purchase market?

Purchase cards have improved in recent months, as not only have terms lengthened, but lenders are actually offering new incentives to pay with plastic.

+Previously, the longest promotional term on a purchase card was 15 months, but it is now possible to find cards for as long 18 months at 0%. Further, with some cards, you can now also get cashback on your spend.

Kevin Mountford, head of banking at MoneySupermarket, said: “Consumers looking to put big purchases on a credit card should do so now as there are some great deals around.”

Here we round up some of the best pieces of plastic for making purchases at 0%.

Best buys

Royal Bank of Scotland and NatWest

RBS and its sister bank, NatWest, are both offering a market leading 18 months interest-free introductory period on purchases, after which the annual percentage rate (APR) kicks in at 17.9% (variable).

However, this means you don’t have to spend a penny on interest on purchases for a year and a half.

Both cards come with the same name – YourPoints World MasterCard Special – which means you will be entered into the YourPoints loyalty program in which you can earn one point for every £1 spent. These points can then be redeemed against brands such as M&S, Boots, Harvey Nichols and Amazon.

When you take out the card you will receive an initial 2,500 points; you will then get the same on that date every year thereafter.

To apply for the cards, you will need to be over 18, have a good credit record, and earn at least £10,000 a year. You will need to hurry though as the deals are available for a limited time only.

Amex

American Express is offering a still-generous 16 months interest-free introductory period on purchases if you apply via MoneySupermarket.

You can then earn 1.25% cashback on virtually everything you buy, and double cashback of 2.5% for one month every year.

At the end of the introductory period, the card charges a representative interest rate of 14% (variable). However it also has an annual fee of £25 this bumps the APR up to a representative 18.5% (variable).

The main benefit of this card, aside from the 0% on purchases, is the fact you get rewarded for spending. So, while there is an annual fee, you should soon be able to recoup the cost if you use this plastic for the majority of your spend – plus you should then be able to earn more on top. However, as with any cashback card, if you don’t clear the balance every month, this benefit will be lost.

To apply for this card, you need to be aged over 18, hold a current UK bank or building society account, have a permanent UK home address, and have an annual household income of at least £20,000.

M&S

Earlier this year, M&S Money increased the 0% period on its purchase credit card to 15 months from account opening for new customers. At the end of this period, the representative APR stands at 15.9% (variable).

As well as offering a lengthy interest-free period on purchases, you also collect points whenever you spend using the card. You earn one point for every £1 spent at M&S, and one point for every £2 spent elsewhere.

To apply for this card you need to be a UK resident and aged 18 or over with a good credit history. Also note you cannot apply for this card if you have held a credit card with M&S Money within the past 12 months.

Halifax

Halifax is offering 15 months interest-free, not only on purchases on its All in One card, but also on balance transfers. At the end of the introductory period, the APR is a representative 17.9% (variable).

A 3% fee applies on balance transfers, and while balance transfers can be made from most credit and some store cards, this excludes other Halifax or Bank of Scotland products.

Also note that the APR and the length of the promotional offer are dependent on your personal circumstances, and that if you have a current account with Halifax, you may already be pre-approved for this offer.

Additional protection

Buying with a credit card offers protection under the Consumer Credit Act.

This states that when making a credit card purchase between £100 and £30,000, the lender and the supplier are jointly liable in the event the goods or services are faulty or not delivered, or if there is any breach of contract.

Cardholders now also benefit from the Consumer Credit Directive (CCD) which came into effect in February 2011. This offers further protection from £30,000 to £60,260.

Be disciplined about paying bills

Crucially, if you have a purchase card, you need to be disciplined about paying off your balance every month, as if not, the benefit will be lost.

These cards can easily tempt you into spending more than you can afford to pay off each month, and if there is an outstanding balance once the introductory period ends, the interest will quickly mount up.

Kevin Mountford says: “You must aim to repay off the balance in full by the end of the 0% period, otherwise you will be stuck with expensive debts come the end of the deal – making this a costly way to borrow.”

Avoid withdrawals

Also avoid using your plastic to take money out of an ATM and then make purchases, as the interest-free deal only applies to purchases made in a shop, say, by using the card directly.

Shop around

With a host of competitive deals hitting the market, credit card borrowers need to shop around for the best option for their needs. But be aware that the best purchase deals are likely to only be available to those with blemish-free credit histories.

If you have had problems with debts in the past, or have a blot on your report, you may not qualify for the top deals – so make sure your record is as clean as it possibly can be.

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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