What Is A 0% Credit Card For?

If you’re looking for a credit card, you might see offers of 0% interest.

They might sound tempting, but it’s important to be aware of the different types of cards and offers before deciding what’s right for you.

Types of 0% interest credit cards

There are 3 main types of 0% interest credit card offers:

0% interest on purchases

These cards offer an interest-free period on purchases, allowing you to pay for items without incurring interest for a set time. However, the length of the interest-free period varies between cards.

0% interest on balance transfers

These cards let you transfer existing credit card debt and pay no interest for a specific period. Keep in mind, balance transfers often come with a fee, and the interest-free period differs by card.

0% on both purchases and balance transfers

Some cards combine both benefits, offering interest-free periods on purchases and balance transfers.

Important: you’ll still need to make minimum monthly repayments to avoid credit card fees. The amount depends on your outstanding balance.

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Why use a 0% purchase credit card?

A 0% purchase credit card can help you spread costs and even build your credit score. Here are some common uses:

Planned expenses: book flights, pay for a holiday, or cover home improvement costs
Unexpected costs: use it as a backup for emergencies like car repairs or large bills

If you make minimum repayments and clear the balance before the interest-free period ends, you won’t pay any interest. Some cards offer interest-free periods lasting over 2 years.

While a 0% purchase credit card is useful, building an emergency fund with savings is a better long-term solution for unexpected expenses.

Things to consider with 0% purchase credit cards

Interest-free period

Once the introductory period ends, you’ll start paying interest on the remaining balance. Check the card’s annual percentage rate (APR) and aim to pay off your balance before the 0% period expires.

Spending habits

Only spend what you need. The more debt you build up, the harder it’ll be to repay before the interest-free period ends.

Additional benefits

Some cards offer perks like cashback or rewards. Compare these features to find the best card for your needs.

Are 0% purchase credit cards better than personal loans?

The answer depends on your financial situation and goals.

A 0% credit card offers flexibility in how much you borrow and when you repay. If you can clear the balance before the interest-free period ends, you’ll avoid paying any interest.

Personal loans may allow you to borrow larger amounts with fixed interest and repayment terms. This can be a better option if you need a structured repayment plan.

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