0% interest credit cards

What is a 0% interest credit card?

These cards come in two different formats: 0% on spending and 0% on balance transfers. A 0% interest credit card does pretty much what it says on the tin.

A 0% interest credit card on spending offers 0% interest on all money spent on the card for a fixed period, which can be anything up to 18 months.

A 0% on balance transfer card does the same thing, but with balance transfers. People with a balance on another credit card can transfer their balance to one of these cards, normally for a fee (around 3%) and will then pay 0% interest on the balance for a fixed period. Again, this period can be up to 18 months depending on the card.

How will it benefit me?

0% interest credits cards can benefit people in several ways. 0% in purchases allows people to make purchases and then have a fixed period in which to pay it off, interest free.

A new customer who wanted to buy a new TV costing £2,000 would benefit from one of these cards if they couldn’t afford to buy the TV outright in the first place. Whilst many shops will offer expensive finance options on buying the TV over a year or two, a 0% interest credit card would give the customer the length of the 0% period to pay off their balance at 0% interest.

A customer with a large credit card balance, paying interest at a typical credit card rate (between 15% and 30%), would benefit from transferring their balance to a 0% interest balance transfer card – as despite having to pay a 3% fee to transfer the balance, they would save money over the 0% period.

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