0% on Purchases

by : StephanieStephanie Wendy

You see great interest free balance transfer credit cards advertised everywhere, but if you're the disciplined type who has managed to avoid building up a hefty credit card debt, these offers won't mean much to you.

But you can still use 0% on purchases offers to your advantage. Rather than going for a balance transfer card, opt for one that offers interest free shopping.

Is this the right type of card for me?

These cards are only beneficial to people free of credit card debt. If you're already carrying round a large balance, you need to work to pay it off with a low APR credit card of zero per cent balance transfer card, rather than thinking about future spending.

You need to be absolutely certain that you'll pay the full balance off by the end of the promotional period to ensure that you don't pay any interest on your spending - as this will cancel out any benefits you get from the card. If you're sure you'll pay it off in time, a 0% on purchases card can be used for large purchases just like an unsecured loan - and it can even make you money.

How can my credit card make me money?

Look for a card that offers cashback as well as . That way you can earn up to around five per cent back on all your shopping without ever having to pay interest on it. A riskier way of making money from these cards is by using it for as much of your normal spending as possible - even paying your bills and mortgage if your credit limit permits.

Then put the money you would've normally used for these things into a high interest account for six months to a year, removing it only to clear your credit card just before you have to start paying interest on the balance.

Although this sounds like a simple way of making free money, it shouldn't be taken lightly. At the end of the interest free period, you're likely to be paying in excess of 17 per cent so you absolutely have to have cleared the balance before this date - 17 per cent on a balance of ?5,000 will cost you ?70 in interest in the first month alone.

Are there any drawbacks?

Make sure you know exactly what is meant by 0% on purchases - it might seem obvious but some banks will charge a higher rate of interest on things like gift vouchers or online gambling - which might also be exempt from the promotional offer.