Compare 0% interest purchase credit cards
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Which banks are offering relief on credit card repayments for COVID-19?
With thousands of Australians losing their jobs due to the catastrophic COVID-19 outbreak, you may be worrying about how you’ll be able to meet your credit card repayments.
Many credit card companies offer new cardholders a 0 per cent interest rate on purchases for a defined period.
Being able to take advantage of spending with no interest is an attractive incentive for many new customers.
What is a credit card with 0% on new purchases?
A 0 per cent purchase credit card typically charges zero interest on purchases during an introductory promotional period.
The length of the 0 per cent interest period varies, but usually ranges between three and 12 months depending on the provider and card.
With these types of cards, all eligible transactions made during the promotional period do not accrue any interest. Any remaining amount that hasn't been paid off by the end of the promotional offer will start to collect interest.
It’s also important to note that not all transactions on this type of credit card will be eligible for 0 per cent percent interest. For example, your provider might stipulate that cash advances are not included. In this case, any cash transactions made during the promotional period would be subject to the standard interest rate.
If you're considering a 0 per cent purchase credit card, don’t forget that the interest-free period is temporary. Paying off your balance before the end of the promotional period means you don’t pay any interest.
Pros and cons of 0% purchase credit cards
When weighing up whether or not to choose a 0 per cent purchase credit card, consider some of the pros and cons:
- No interest for a set period – The most obvious benefit is that you have the opportunity to make purchases during the introductory period without incurring any interest, provided you pay back the balance before the period ends.
- Good for large purchases – If you want to make a sizeable purchase but need some time to pay it off, a 0 per cent purchase credit card can help by allowing you to space out repayments.
- Useful for balance transfers – Certain providers offer 0 per cent interest on balance transfers for a defined period, giving you a window of time when interest won’t accrue on your balance.
- Benefits are temporary – The 0 per cent interest only lasts for the duration of the introductory period. Once it ends, the card will revert to the standard interest rate, which could be high.
- Balance transfer fees may apply – Even if your provider offers 0 per cent interest on balance transfers, they may still charge you a balance transfer fee.
- Limitations apply – Not all transactions are eligible for 0 per cent interest, and you could be penalised for late payments.
Types of 0% purchase credit cards
Most 0 per cent purchase credit cards fall into one of the following categories:
- Standard 0 per cent purchases – This includes a 0 per cent interest rate on purchases over an introductory period. The interest rate becomes standard after the period ends.
- 0 per cent purchases with balance transfers – Includes no interest payable on purchases as well as balance transfers during the promotional period. With this type of card, you can transfer and repay your existing credit card debt interest-free while making purchases with no interest.
- 0 per cent purchases with frequent flyer points – In addition to the interest-free period, you can earn frequent flyer miles for certain airlines on purchases made for the entire life of the card.
- 0 per cent purchases with other rewards – In addition to the interest-free period, you can earn rewards such as cashback and concierge services for the life of the card.
Factors to consider when choosing a credit card with 0% on new purchases
Choosing the right credit card to suit your requirements means doing some research to make sure you know what you’re signing up for. RateCity’s credit card comparison tool can be used to compare the following features:
- Length of the interest-free period – The 0 per cent interest period usually ranges between three and 12 months, so it’s important to choose a card with an introductory period that makes sense for you. Calculate how much you plan to spend and whether you can repay that amount in full before the standard interest rate takes effect.
- Standard interest rate – Once the introductory period ends, you’ll pay the card’s standard interest rate on any remaining balance and future purchases. If you want to keep using the card after the promotional period, you may want to look for one with a lower ongoing interest rate.
- Annual fee – Most cards charge an annual fee, so consider if the interest-free benefits and other perks of the card are worth this cost.
- Eligible transactions – Some types of transactions, such as cash advances, may not be eligible for 0 per cent interest. Read over the fine print to see what’s excluded from the promotion.
- Additional benefits – Depending on your needs, you may want to choose a card that offers other benefits such as complimentary insurance or frequent flyer points. This way, you can continue to get the most out of your card after the promotional period is over.
^The best credit card for you may not be the best credit card for somebody else. Before selecting a credit card, compare the interest rates, fees and features of different options to see which ones may suit your personal financial goals. For assistance, consider contacting a qualified financial adviser.
A property and personal finance writer, Nick Bendel covers property, loans, credit cards, superannuation, and other bank products. Nick has previously written for The Adviser, Mortgage Business, Lifehacker, Business Insider, Yahoo Finance, and InvestorDaily, and loves getting elbow-deep in the latest ABS, APRA and RBA data.
If you’re wondering about how to make a credit card online application, here are some steps to follow:
- Test the market. Many credit card options are available online. Compare providers by fees, interest and perks to ensure you’re getting the best deal.
- Complete the application. Once you’ve selected a card, head to the provider’s website and complete the online credit card application form. Forms vary by providers.
- Provide details. Most cards require you to meet age, residency, income and credit status condition, and you need to provide details like a bank account statement to prove this.
- Review details. Ensure the information you’ve entered is correct.
Generally, when we talk about credit card interest, we mean the purchase interest rate, which is the interest charged on purchases you make with your credit card.
If you don’t pay your full balance each month (or even if you pay the minimum amount), you are charged interest on all the outstanding transactions and the remaining balance. However, interest is also charged on cash advances, balance transfers, special rate offers and, in some cases, even the fees charged by the company.
The interest rate can vary, depending on the credit card. Some have an interest-free period, otherwise you start paying interest from the day you make a purchase or from the day your monthly statement is issued. So avoid interest by paying the full amount promptly.
A credit card can be an easy way to make purchases online, in person or over the phone. When used properly, a credit card can even help you manage your cash flow. But before applying for a credit card, it’s good to know how they work. A credit card is essentially a personal line of credit which lets you buy things and pay for them later. As a card holder, you’ll be given a credit limit and (potentially) charged interest on the money the bank lends you. At the end of each billing period, the bank will send you a statement which shows your outstanding balance and the minimum amount you need to pay back. If you don’t pay back the full balance amount, the bank will begin charging you interest.
The credit card market changes all the time, so the credit card with the highest annual percentage rate is also liable to change.
Keep in mind that credit card interest rates are expressed as a yearly rate, or annual percentage rate (APR). A low APR is generally good but also consider:
- There can be different APR's for each feature of the card (e.g. purchases may have an APR of 14 per cent, while cash advances on same card could have an APR of 17 per cent.
- Credit cards with a variable rate can change throughout the year, affecting your APR, so check the full details.
- If you pay your balance in full every month, having the lowest APR is not as important as the other fees associated with the card. However, if you carry a balance from month to month, then you want the lowest APR possible.
Think of credit cards as a short-term loan where you use the bank’s money to buy something up front and then pay for it later. Unlike a debit card which uses your own money to pay, a credit card essentially borrows the bank’s money to fund the purchase. When you apply for a credit card, the bank assesses your income and assigns you a credit limit based on what you can afford to pay back. At the end of each billing cycle, which is usually monthly, the bank will send you a statement showing the minimum amount you have to pay back, including any interest payable on the balance.
You can get money from a credit card, but generally it will cost you.
Withdrawing money from a credit card is called a cash advance, as it operates more as a loan than a simple cash withdrawal. Because it is a loan, you may be charged interest on your cash advance as soon as you make the withdrawal. Interest rates are also usually much higher for cash advances than standard credit card purchases.
In addition to the interest rate, you may also be charged a cash advance fee. This could be a flat rate, or a percentage of your total cash advance. If you are considering a cash advance, make sure to add up how much it will cost you before committing.
There is no one-size-fits-all best rewards credit card. It's best you research what type of rewards program you'd like, as well as the fees, interest rate and conditions associated with those types of cards before making a choice.
Rewards credit cards can also come with high annual fees that may end up nullifying the rewards, so think how often you use the card to decide whether the benefits outweigh the extra cost for you. A card with a lower annual fee might require a lot of spending to get any useful rewards, while another card with a higher annual fee might need fewer purchases to get a reward.
It’s important to cancel your old cards to avoid any additional fees. Unless you’re doing a balance transfer, you’ll need to pay the outstanding balance before you cancel your credit card. If you’ve opted for a card with reward points, make sure you redeem or transfer the points before you close your account. To avoid any bounced payments and save yourself an admin headache, redirect all your direct debits to a new card or account. Once you’ve done all the preparation, call your bank or credit card provider to get the cancellation underway. Once you receive a confirmation letter, destroy your card and make sure the numbers aren’t legible.
Credit cards are a personal responsibility, so getting a credit card is up to your specific financial wants and needs. As a hypothetical, ask yourself if you could afford repayments on the maximum credit limit offered by a credit card you may be interested in.
Also, consider all the pros and cons of taking out a credit card before you sign on the dotted line. Pros include the fact that credit cards can be a good way of paying for purchases, earning rewards points and building a credit history. Cons include how credit cards can be expensive and put a lot of financial pressure on you.
The numbers on your credit card actually follow a universal standard which is used to identify specific functions. Each credit card has a different amount of numbers. Visa and Mastercard have 16, American Express has 15 and Diner’s Club has 14.
The first number on a credit card always identifies what type of credit card it is. Visa cards start with a 4, whereas Mastercard starts with a 5 and American Express with a 3. The remainder of the digits represent the account number, including the last number which is used to verify that your credit card is actually valid.
Credit cards also have additional verification numbers, which are mainly used when the card isn’t present for phone and online purchases. These are the three-digit numbers on the back of Visa and MasterCard or the four-digit numbers on the front of an American Express card.