0% APR Credit Cards


0% APR credit card holder on laptop

In brief, 0% APR credit cards allow their holders to defer interest payments on their credit card balance for a fixed introductory period.

There are two types of 0% APR credit cards on the UK market today, balance transfer cards and 0% purchase cards.

Balance Transfer Credit Cards

Balance transfer credit cards are the most popular credit card in the UK, and with the benefits they offer to a savvy cardholder and the multitude of cards to choose from, it is easy to see why. In brief, balance transfer credit cards offer the cardholder the option to transfer an existing debt from another credit card (or indeed multiple cards) onto a single card, and pay no interest for a fixed period of time.

Most balance transfer card issuers stipulate a timescale by which all balance transfers must be completed, in order to benefit from the introductory offer (typically around 60-90 days). You should check your chosen card carefully to ensure that all your debts are consolidated well within this timescale.

Balance transfer fee

Nothing in life is free, and transferring a balance is no exception (unless you opt for a ‘no balance transfer fee card’, where the balance transfer duration is almost definitely shorter). Typically the fee charged is around 3% of the balance you are transferring, and this is added to the credit card balance.

Balance transfer duration

It is the general rule that the higher the balance transfer duration, the higher your credit score/rating needs to be. With this in mind, before you apply and are perhaps rejected, it makes sense to check out your credit history with one of the 3 credit reference agencies (Equifax, Experian, or CallCredit). Furthermore, it makes sense before you apply for a high balance transfer duration card that you may not need, to sit down and work out exactly what debts you plan to transfer and how long it will realistically take you to pay it back. Once you have a timescale in mind, you should apply only for those cards that offer that duration. In this way, you will perhaps avoid the credit card issuer rejection, and not have to undertake multiple applications (which will harm your credit score further).

If you have applied and been accepted for a balance transfer card in order to consolidate your debts and pay off your balance more quickly, it is always advisable to set a reminder for when the balance transfer duration runs out. That way you will know the deadline by when you should have paid your debt off, and if there is any balance left over, you will know when to shop around again for another balance transfer card.

0% Purchase Credit Cards

0% purchase cards, as their name suggests, offers the cardholder a specific period of time where they pay no interest on their purchases. These cards can be particularly useful if you have a large purchase, or indeed a number of small purchases, which you need to pay off over a number of months.

Whilst it can be tempting with such cards, you should never overspend on your 0% purchase card. Remember that the balance you accrue with your credit card spending needs to be repaid within the specified time period, else you will be left paying any remainder at the standard APR rate.

As with their balance transfer cousins, you should set a reminder of the expiry date of the introductory offer, to make sure that you have cleared your balance, or if you do have a balance left, you are in a position to shop around again, this time for a balance transfer card.

Hints at tips on making the most of your 0% APR card