0% purchase cards
A 0% purchase card charges no interest on new spending for an introductory period, commonly a year or more depending on the card and market. It's a genuine way to spread the cost of a big purchase without paying anything extra, as long as you clear the balance before the 0% period ends, miss that date and the remaining balance typically jumps to the card's standard, often much higher, ongoing APR.
A worked example
If you buy a $2,400 laptop on a card with an 18-month 0% purchase offer, and set up a fixed payment of $133/month, you'll clear it exactly as the 0% period ends, having paid zero interest on the whole purchase. If you only pay $50/month instead, you'll still owe roughly $1,500 when the 0% period ends, and that remaining balance then starts accruing interest at the card's regular rate.
Key takeaways
- The 0% period is temporary, know the exact end date and plan around it.
- Dividing the purchase by the number of 0% months gives you a safe minimum monthly payment target.
- Any balance left when the 0% period ends starts accruing interest at the card's standard (often high) rate.
Common mistakes
- Not tracking exactly when the 0% period ends, and being caught off guard when interest starts.
- Making only minimum payments during the 0% period, leaving a large balance still owed at the end.
- Using the card for more purchases beyond the original plan, making the payoff math harder to track.
Test yourself
1. What does a 0% purchase card offer?
- Free money with no repayment needed
- No interest on new purchases for a set introductory period
- Unlimited credit forever
- Cash back on every purchase
Answer: No interest on new purchases for a set introductory period. A 0% purchase card temporarily removes interest charges on new spending, for a limited time only.
2. What happens if a balance remains when the 0% period ends?
- It's automatically forgiven
- It typically starts accruing interest at the card's standard rate
- The 0% period extends automatically
- Nothing changes
Answer: It typically starts accruing interest at the card's standard rate. Any remaining balance after the promotional period usually starts accruing interest at the regular, often higher, APR.
3. How can you calculate a safe monthly payment to clear the balance in time?
- Guess randomly
- Divide the total purchase by the number of months in the 0% period
- Always pay the minimum
- It's not possible to calculate
Answer: Divide the total purchase by the number of months in the 0% period. Dividing the purchase amount by the 0% period length gives a payment plan that clears the balance exactly in time.
Take this lesson interactivelyAll lessons
The interactive version tracks your progress, scores the quiz and includes the AI tutor.
Keep learning
Sources and further reading
- CFPB: Consumer tools for credit cards
- MoneyHelper (UK): free, impartial money guidance
- FCA (UK): Consumer information