What’s meant by 0% interest?
There are different ways 0% credit cards can work. They may offer 0% interest on purchases, 0% interest on balance transfers, or 0% interest on money transfers. Some cards will offer a combination of these – these are sometimes known as 'all-rounder' credit cards.
0% interest on purchases
If a credit card offers 0% interest on purchases, it means that whenever you make new purchases with it, you won’t be charged interest on the purchase amounts during the introductory period, as long as you make the minimum monthly repayments.
This makes it a good way to spread the cost of your purchases over the introductory period. Once the introductory period ends you will have to pay interest on any remaining balance.
Usually, you can make multiple purchases on your credit card during the introductory period, provided you don’t go over your credit limit. But take care – if you find that you’re regularly using your card to borrow, this can quickly spiral out of control. The more debt on the credit card, the more you will have to repay before the interest-free period ends and interest is charged.
0% interest on balance transfers
If a credit card offers 0% interest on balance transfers, it means that you can transfer credit card debt from an existing credit card or store card to it, so you’ll owe this amount on your new card. And you won't be charged interest on the transferred balance during the introductory period, as long as you pay it off within the agreed period.
A balance transfer fee usually applies – this will likely be a percentage of the amount you transfer, with a minimum fee.
In order to get the 0% offer on your balance transfer, you may need to make the transfer within a certain time period of opening the account, which is known as the initial period. Check the terms and conditions to make sure you know when to make the transfer by.
Please note that the 0% interest only applies to the amounts transferred during the initial period. It doesn’t mean you can repeatedly transfer balances from other cards to your credit card and pay 0% interest.
Also, you usually can’t transfer balances in this way between two credit cards with the same bank or banking group.
0% interest on money transfers
If a credit card offers 0% interest on money transfers, it means you can transfer money from your credit card to your current account, and you won’t be charged interest on the amount transferred, as long as you make the minimum monthly repayments. Once the interest-free period ends, standard rates will apply on any remaining balance. The standard rate for money transfers is usually higher than other standard rates, so make sure you check this carefully before making a money transfer.
Money transfer credit cards usually have a one-off fee to transfer money from your credit card to your current account. This is normally a percentage of the amount you transfer.
