How does a credit card with 0% on purchases work?

You can use any credit card to spend, but unless you pay off everything you buy each month you will usually have to pay interest.

Cards that offer 0% on purchases charge no interest at all for several months after you get the card. This is known as the interest free period.

For example, a credit card with 24 months interest free means you will not pay interest on what you buy with your card for 24 months as long as you make the minimum payment each month. The longest 0% deals last for more than two years.

Why get a 0% deal?

You can use a 0% purchases card to borrow for free.

You can spread the cost of a large purchase over several months. As long as you pay it back before the interest free period ends and do not break the card's terms, you will not need to pay any interest or fees at all.

How much does a purchases card cost?

If you pay back what you owe and use the card sensibly, you can borrow interest free.

However, unless you pay off the balance in full before the 0% period ends, you will start to be charged interest every month.

You will also have to avoid the other fees and charges that can come with credit cards. Learn how to avoid credit card charges to make sure your get your card for free.

Make sure you do not spend beyond your means because a 0% purchases card does not give you free money - you will have to pay off every penny you borrow eventually.

How to choose a 0% purchases credit card

The best interest free purchases credit card is the deal which offers you 0% for the longest, giving you longer to pay off the balance without being charged interest.

You can compare every 0% purchases credit card here to find the one that offers the longest interest free period.

We also show each card's representative APR, which is a guideline of the interest rate they will charge after the 0% period ends.

You should only base your decision on this rate if you intend to carry on using the card after the interest free period ends.

How to manage your card

Always pay at least the minimum amount

How much are minimum payments?

At least 1% of what you owe, plus charges and interest if you do not have a 0% deal. There will also be a minimum amount in pounds of at least 5.

Your credit card statement will give you the minimum amount you need to pay each month and the date you have to pay it by.

You will be charged a late payment fee costing about 12 if you miss the payment, and it will show on your credit record too.

Your provider could also end the 0% purchases deal on your card and begin to charge you interest on what you owe.

Here is how to set up a direct debit to pay at least the minimum amount every month. As long as there is enough money in your bank account each time, this will ensure you do not miss a payment.

Note the date the deal ends

Work out how long your card will be interest free by checking how many months your deal lasts and then counting forward from the date your application is accepted.

Keep this date in mind when you work out how you will repay the card, and set a reminder on your calendar or phone to pay off the remaining balance and close your account at the end of the deal.

Try to clear the balance before the 0% deal ends

If you want to avoid paying any interest at all, you will need to pay off the full balance by the end of the 0% term.

The simplest way to do this is by splitting the balance evenly. Divide the total balance by the number of interest free months to work out how much to pay each month. For example, to pay off a 2,000 purchase over 20 months, you would need to repay 100 per month.

You could also make just the minimum payments each month and then pay off the rest just before the end of the interest free period. Make sure you save up enough to repay it by the end because you will have to start paying interest otherwise. You could even save up this money in a high interest savings account and make a profit.

What to do after the interest free period

When the deal ends, your card provider will start to charge you interest each month if you still owe anything on your card.

If you still want to buy things with a credit card, it is worth looking for a new card with a lower interest rate, or even a new 0% purchases card.

What if there is still a balance left?

If you do not manage to repay the whole balance before the end of the 0% period, you could use a balance transfer to move it to a new card with a 0% period.

Alternatively, you could get low rate credit card instead of a 0% purchases card. Although these do charge interest, they offer low rates that can last for a longer period, so they can work out cheaper if you need years to pay off your card.