A 0% purchase credit card has an introductory or promotional interest rate of 0% on purchases for a specified period, which can vary between six and 15 months (or longer), offered to new cardholders only.
This introductory offer is quite different from a credit card’s standard interest-free days (usually either up to 44 or up to 55 days) granted in each billing cycle for cardholders who do not have a carried-over balance from the previous month. The introductory offer, while it lasts, effectively replaces the standard interest-free days by making them unnecessary.
Only the minimum repayment is necessary
During the 0% purchase introductory offer period, cardholders are still required to make the minimum monthly repayment (e.g. 2% of the balance owing), but can otherwise allow their purchases balance to grow (restricted only by the card’s credit limit) without incurring any interest charges.
Revert interest rate kicks in at the end of the offer period
Once the introductory offer period expires, the full balance accumulated from purchases made during the period will need to be repaid at once, in order to avoid paying the revert interest rate on the balance. The revert interest rate is usually the card’s ongoing interest rate applied to purchases balances carried over from the previous month.
Not to be confused with 0% balance transfers
It's important to note that there is a distinct difference between a credit card offering 0% on purchases and one with 0% on balance transfers. They are two completely separate introductory offers. Click here if you want to transfer an existing credit card balance.
Credit cards offering 0% on purchases are an attractive way to spread out the cost of larger ticket items, but they aren't the only option available, especially if you want longer repayment terms. Since it is uncommon to get 0% interest on purchases for longer than 18 months, you may want to check out a personal loan instead. While you won't get 0% on a personal loan — expect rates in the 5 - 15% region — you can choose to repay over a substantially longer period. Another thing to consider is that many personal loans have a variable interest rate which is personalised based on your credit score. So, if you have good credit, you may qualify for an interest rate at the lower end of the range due to your perceived credit worthiness.