Purchase credit cards

A purchase credit card can be an affordable way to spread the cost of things you buy. For example, it may be useful for a big purchase you can’t quite pay for in one go, such as a sofa or a holiday.

How do 0% purchase credit cards work?

You can spend money on a 0% purchase card without having to pay interest for a certain period of time - this could be for as little as three months or over 20 months. You’ll need to stick to the credit limit and make the minimum monthly payments on time and in full, or you may lose the promotional rate early.

What is the interest rate on a credit card?

When you take out a credit card, you’ll usually pay back interest – this is on top of paying back money spent on the card or any debt that’s been transferred to it. The amount of interest you pay is calculated as a percentage of what you owe – this percentage is called the interest rate.

For credit cards and loans, you’ll usually see an APR (Annual Percentage Rate). This is the total amount of interest and fees you pay each year. APR is commonly used to compare different credit cards.

In general, credit card rates often vary from 5% to over 30%. With these cards, it’s important to clear the balance every month, in full and on time – otherwise, the interest can get quite expensive. Purchase credit cards usually offer a 0% promotional rate for things you buy instore or online – but they may charge a different rate for other kinds of transactions, such as cash withdrawals.

What does it mean when it says 0% on purchases?

0% refers to the interest rate you’d be charged on any purchase you make, during the specified time period. As long as you make the minimum monthly repayments on time and in full, and stick to any other terms and conditions on the card, you shouldn’t have to pay interest on the qualifying balance.

A simple example:

  • You have a 0% purchase card for a 12-month period
  • You buy some furniture on the card that costs £800 in total
  • You pay at least the minimum fee required on the card each month (on time and in full) - £100 a month, for 8 months
  • By the end of the eighth month you have paid off the card and paid no interest

Of course, some people use 0% purchase cards quite regularly, e.g. to do their shopping. The key things to remember are to stick to the credit limit, and to always make at least the minimum monthly repayments – on time and in full – to ensure you benefit from the promotional rate.

Make sure you know when the introductory rate ends. If you can, budget carefully to clear the balance in full before the end of the promotional period, to avoid being moved on to what may be a high interest rate once it’s over.

Who is a purchase credit card right for?

You’ll usually need a good credit score to be approved for a purchase credit card. You can get an idea of your chances of approval when you compare purchase cards with Experian – we’ll show you your eligibility rating for each deal based on your credit information. Remember, we’re a credit broker, not a lender – we can help you find deals, but we don’t provide credit or decide whether to approve you.

0% purchase credit cards may be useful for people who want to spread the cost of a large purchase over several months. You’ll usually be able to make flexible monthly payments – meaning you can make large monthly repayments when you can afford to, and smaller payments in months when money is tight. But remember, you must be able to comfortably meet the minimum monthly repayments – and it’s best if you can pay back the full balance before the promotional period ends.

Common purchases made on a purchase credit card may include:

  • Home improvement costs, such as extensions or renovations
  • Holiday costs, such as flights and hotel bookings
  • Big events, such as weddings, bar mitzvahs and birthday parties
  • Upgrading your car

How to apply for a purchase credit card

Before you apply for a 0% purchase card, it can be helpful to get an idea of your chances of approval. Applying only for cards you’re eligible for can help you avoid refusal, and reduce the number of applications you have to make. This is important, because each time you apply for a credit card a hard credit search is recorded on your credit report – this can be seen by lenders and may reduce your credit score. However, simply comparing credit cards before you apply leaves a soft search on your credit report – this won’t affect your credit score, as lenders aren’t able to see it.

To get the best purchase credit card offers, it can be helpful to improve your credit score. Here are our top tips for doing so:

  • Keep paying your credit bills on time, as missed or late payments may show up on your credit report and reduce your score
  • Register to vote as this helps lenders confirm who you are and where you live
  • Each credit application is recorded on your Experian Credit Report for 12 months, so the fewer you’ve made in the last six months, the better
  • Try to stay within any credit limits you have – if possible, stay under 25% of your limit as this can help protect your credit score
  • Check your Experian Credit Report – make sure there are no negative factors on it that have been recorded by mistake

You can find out your free Experian Credit Score and check your chances of being approved by viewing your eligibility rating for relevant 0% purchase credit cards.

How to manage a purchase credit card

One of the most important parts of managing a 0% purchase credit card is to avoid going over the credit limit or missing monthly repayments. Miss a payment and you risk paying interest on the balance, getting extra charges, losing the promotional rate, and possibly a drop in your credit score.

While making at least the minimum monthly repayment is crucial, paying more than the minimum will pay off the balance quicker. The end of the promotional period can come around quickly, so it’s important to budget well and plan ahead to avoid paying the standard rate.

Setting up a direct debit can ensure you don’t miss a payment. Also, you may be able to change the payment date to a day that suits you - for example, your pay day – which can help ensure you have enough funds.

Find a purchase card that suits you

Compare credit cards with Experian, and get an idea of your chances of approval for each card when you compare – we’ll match your credit information with lenders’ criteria to calculate your eligibility rating for each deal. Remember, we’re a credit broker, not a lender, working with selected lenders - we can help you find deals, but we don’t provide credit or decide whether to approve your application.

Experian uses your credit information - as well as information you provide about your requirements and financial circumstances – and compares it to lenders’ criteria to show you how likely you are to be approved for a credit card.

Compare credit cards with Experian