0% purchase credit cards

With 0% on purchases, you can save a ton of money on these cards, especially if you are making a big purchase.

By   |   Verified by David Boyd   |   Updated 26th January 2021

Comparing 0% purchase credit cards

ANZ Platinum Credit Card

On ANZ's website

Featured

ANZ Platinum Credit Card

Balance transfer

N/A

Purchase rate

17 months at 0% p.a.

Annual fee

$0.00 for 1st year

Highlights

  • 0% p.a. on purchases up to 17 months. Reverts to 20.24% (standard purchase rate). Eligibility criteria, T&Cs, fees, and charges apply.
  • Up to 55 days interest-free on purchases when you pay your account in full each month.
  • No annual fee for the first year (save $87). Standard Annual Fee of $87 p.a. applies, thereafter.

Pros

  • Take advantage of the 0% p.a. for the first 17 months on purchases.
  • $0 annual fee in the first year, $87 p.a. thereafter (terms and conditions apply).
  • Complimentary insurance covers, including international travel insurance, purchase protection insurance and extended warranty insurance

Cons

  • There are no rewards program for this card.
Bendigo Bank Low Rate Credit Card

On Bendigo Bank's website

Apply by 31 January 2021

Bendigo Bank Low Rate Credit Card

Balance transfer

N/A

Purchase rate

15 months at 0% p.a.

Annual fee

$45.00 p.a. ongoing

Highlights

  • Enjoy 0% p.a. for 15 months on purchases.
  • Receive a $150 Woolworths Supermarket Gift Card when you spend $1,000 on eligible purchases within 90 days of account opening.
  • Save with its low annual fee of $45 p.a. ongoing.
Virgin Money No Annual Fee Credit Card

On Virgin Money's website

Apply by 29 January 2021

Virgin Money No Annual Fee Credit Card

Balance transfer

12 months at 0% p.a.

Purchase rate

12 months at 0% p.a.

Annual fee

$0.00 p.a. ongoing

Highlights

  • $0 annual fee for the life of the card.
  • Transfer your balance at 0% p.a. for 12 months on balance transfers (reverts to 20.99% p.a.)
  • 0% p.a. for 12 months on purchases (reverts to 18.99% p.a.)

Pros

  • No annual fee ever.
  • 0% p.a. interest rate for up to 12 months on balance transfers and purchases.
  • Up to 4 additional cards, also with $0 annual fee.

Cons

  • The revert interest rates for balance transfers and purchases are relatively high.

Overview

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.

Alternatives

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.

Learn about 0% purchase credit cards

Find out how 0% introductory offers work and how you can take advantage of them.

  • Pros & cons

  • Tips

  • FAQs

Insufficient repayments can lead to big debts

For some cardholders, not having to make large monthly repayments can mean that they are tempted to spend more than they can afford, and end up with a high-interest debt when the introductory offer period ends.

Learn all the features of the card

Choosing a card simply on the basis of the 0% purchase offer, and not checking its other features (such as the annual fee and revert interest rate) can be a mistake.

Loads of savings

You can save heaps in interest charges you might otherwise incur if you can’t always pay off your credit card balance every month.

You can also earn a little interest by putting your credit card monthly repayment cash into a savings account instead.

Non-payments can be more expensive than the promo

Missed or late repayments could end up costing more in penalty fees than you save in interest.

Revert rate is usually higher than actual purchase interest rate

The revert interest rate applied to any unpaid balance at the end of the offer period can be very high, even if the card is a relatively low interest card.

Similar to a personal loan but without the interest

You could avoid taking out a short-term personal loan for major purchases, once again saving interest cost and possibly monthly account fees. Great for holidays, Christmas shopping, weddings.

Stay disciplined

Don’t get carried away and blow your budget, just because you can avoid interest charges for a while. The day of reckoning will eventually arrive, at which point you must repay what could potentially be a very large balance, or start paying interest on it. Aim to deposit in a savings account an amount equivalent to the total of the purchases you have made each month. That way you’ll have the repayment cash ready at the end of the introductory offer period, plus a tidy little sum in interest earned.

0% purchase cards are useful for major expenditure

If you have a major purchase planned – one that you know you can afford – a 0% purchase card is a great way to spread the cost over a longer period. To get the greatest benefit, make your big-ticket purchase as soon as possible after you receive your new card.

For example, if you want to spend $1,500 on a new laptop, kitchen appliance or furniture, a card with a 0% purchase offer lasting for 12 months would help you to spread the cost over a year. Put $125 in your bank savings account each month, and when the offer expires you’ll have $1,500 plus interest, more than enough to cover your repayment, and much less painful than coming up with $1,500 upfront.

Don’t risk losing your offer by missing repayments

Remember that you still need to make monthly minimum repayments, even though you can let the rest of the balance accumulate without incurring interest. If you forget to make these minimum repayments (typically 2% or 2.5% of the card account balance, or $5, whichever is greater) you run the risk of having your 0% purchase offer cancelled. You’ll also incur late or missed repayment penalty fees, which could negate the savings you make on purchase interest.

Make a note of the offer expiry date

The interest-free period begins when your card application is approved, not on the day you receive the card in the mail or the day you make your first purchase. Make sure you know the exact date on which the introductory offer period ends and make a note of it in your diary. Then plan to make full repayment of your purchases balance on or before that date.

Only purchases are interest free – not cash advances

Don’t make the mistake of assuming that, just because purchases are interest free for a while, cash advances are interest free during this period as well. Credit card cash advances are never interest free.

Check the card’s other features

If you’re looking for a card that you’ll want to keep long-term, don’t be too swayed by the 0% purchase offer. Look at other features as well, like the ongoing interest rates, annual fee, and any rewards points or complimentary benefits. The long-term cost or benefit of these could far outweigh the temporary benefit of 0% interest on purchases.

If you want to transfer a balance, look for a card with combined offers

Introductory offers of 0% on balance transfers are a great idea, except for one thing: with the vast majority of credit cards, having an unpaid balance transfer on your account means that any new purchases you make will incur interest charges from the transaction date because you’ll forfeit the up to 44 or 55 interest-free days normally granted in each billing cycle. So you’ll probably avoid making new purchases, which is a pity because you’ll miss out on any rewards points – including bonus points – and most complimentary benefits.

But there is a way around this. Simply choose a card which has a combined 0% purchase offer and 0% balance transfer offer. It means you get all the benefit of a 0% balance transfer plus you can still use your card to make purchases.

What is a 0% purchase credit card?

Many Australian credit cards feature interest free days on purchases, which is a fixed period in which no interest is applied. The length of this period varies, but is often 55 days. Some credit cards also feature a special promotional offer with a 0% interest rate on purchases for an introductory period. The promotional period depends on the specific deal, but can be for as long as five or six months. This means you can use your credit card for purchases and pay no interest during the introductory offer.

What are they useful for?

Credit cards with zero per cent on purchases can be particularly useful if you want to finance a large, one-off purchase and repay the cost over the promotion’s fixed period. You need to be careful when you use a 0% purchase credit card – other types of transaction attract interest, and the purchase rate increases at the end of the promotion – but used correctly they can be a great way to make purchases and avoid paying interest.

What features should I consider when comparing 0% purchase credit cards?

There are several key features you need to examine when comparing and selecting a card. It is also important to look at your own finances and the way you manage your money to find the credit card that is best suited to you.

  • The length of the introductory offer: This is an essential consideration when comparing any credit card. The longer the period, the easier it will be to repay the debt interest free.
  • Standard purchase rate: When the promotion comes to an end the purchase rate reverts to a higher standard purchase rate. While the best plan is to clear the balance within the promotional period, it is possible you will still have a debt on your credit card when the offer expires. You may want to continue to use your card as a standard credit card after the promotion ends, so it is important to know how the deal changes and what interest rates apply.
  • Annual fee: 0% purchase credit cards sometimes attract an annual fee. Although cards with a higher annual fee often feature attractive extras, you need to make sure the fee, or any other charges, doesn’t negate the savings you make on the promotional purchase rate.
  • Other features and benefits: Apart from the introductory purchase rate, you should take the time to consider all the other features included in each credit card deal. Gold and platinum level credit cards with a 0% purchase rate offer other benefits such as rewards programs, concierge services and insurance. If you plan to use a credit card for a large purchase, a household item or a holiday for example, extra travel or purchase protection could be very helpful.
  • Your budget: The best way to use a credit card with a promotional interest rate is to use it to make purchases and repay the amount before the introductory offer ends, so it is important to look at your finances and calculate how much you can realistically afford to repay. This will give you an idea of how much you can afford to spend on credit card purchases and how much you need to put aside each month to clear the balance.
  • The terms and conditions: Before applying, carefully study the small print of the terms and conditions for any extra charges, how the deal changes when the introductory period ends, and any clauses and penalties that could cancel the offer.

Does the promotional rate apply to all transactions?

No. The 0% rate only applies to standard credit card purchases. Other transactions attract interest and could negate the savings you make on the promotional purchase rate. You should try to avoid using the credit card for cash advances, including ATM withdrawals, buying foreign currency and using you credit card for gambling. Relatively high interest rates are applied to these types of transaction, and they start accruing interest immediately. Once again, it is important to check the terms and conditions to familiarise yourself with exactly what payments are included in the introductory rate, what transactions are exempt and the relevant interest rates.

When does the interest-free period start?

Any promotional interest-free period on purchases will begin on the day your card is approved, which may be several days earlier than the day on which you actually receive your card and are able to begin using it. So it’s important to make a note of the date on which your card application was approved. Then put a reminder in your paper or electronic diary, three, six, nine or twelve months ahead (depending on the length of your interest-free period), to alert you to the fact that your interest-free period is about to expire. In fact, make that diary note, and plan to pay off your purchase balance, a couple of days ahead of the expiry date, to allow for payment processing delays or the occurrence of non-banking days such as weekends. Suppose you had accumulated a purchase balance of $25,000 over 12 months. If you were three days late making the payment to clear the balance, at a revert rate of 20% you’d end up paying $41 in unnecessary interest, and you’d probably incur a late payment fee as well.

What happens if I forget to make a monthly minimum repayment?

Omitting or forgetting or being late with the monthly minimum repayment could put your interest-free deal in jeopardy, possibly leading to its cancellation. It could also damage your credit rating. At the very least you may incur a sizeable late payment fee. So you must ensure that you make a minimum repayment each month. Your monthly account statement will explain exactly how much you have to pay and the date by which it must be paid. It’s best to diarise the payment due date (because it won’t necessarily be on the same date each month), and if you’re planning to use BPAY to transfer your payment from your bank account to your credit card you may need to allow at least one extra processing day, especially if you’re making an internet banking transaction in the evening or at the weekend. (Check with your bank for exact BPAY processing times.)

Can I use a 0% purchase card overseas, while I’m on holiday for example?

Yes. Making purchases in a foreign currency, such as hotel and restaurant bills, transport costs and souvenirs, does not count as buying foreign currency. You will not be charged any interest on this kind of transaction during the promotional interest-free period. But buying foreign currency (e.g. banknotes) to spend while you are on an overseas holiday is regarded as a cash advance, not a purchase, and you will pay the normal (usually very high) cash advance interest rate, charged from the very day on which you buy the currency. So, to make the most of your 0% purchase card while you are on holiday overseas, keep your cash purchases to a minimum to avoid having to replenish your supply of foreign currency banknotes. Use your 0% purchase card to make payments instead, whenever you can, and then pay off the balance before the end of the interest-free period. Note that if you are paying in a foreign currency, you will be charged a foreign exchange fee, which is typically 3% of the purchase amount.

If I don’t repay my balance in full at the end of the interest-free period, what rate of interest will I then have to pay?

Once the introductory interest period has expired, any unpaid balance on your credit card account immediately begins to attract the "revert" rate of interest. This simply means that the honeymoon is over, and you now have to pay the (usually hefty) rate of credit card interest. You should note that some will revert to the purchase rate and others will revert to the higher cash advance rate. If you don’t plan to pay off your balance in full at the end of the promotional period, read the small print to make sure you understand the interest rate you will be paying.

Is the card offering the longest interest-free period always the best deal?

Not necessarily. If you know that you will have no problems paying off your purchase balance at the end of the interest-free period, the cash advantage you will gain lies only in the interest you can earn by leaving your money in the bank instead of using it to make credit card repayments.

Let’s say you accumulated a purchase balance of $20,000 over 12 months. Your average balance would be roughly $10,000, which means that at a savings account interest rate of 3% you would earn $300 by postponing your repayments for 12 months. But there might be a competing card offering only six months at 0%, letting you earn only half as much in interest – $150 – but with other money-saving benefits attached in the form of rewards program points plus a range of insurance cover worth over $500 every year.

Calculate the best deal by working out the dollar value of any benefits you would use, including the 0% purchase option. The card with the highest dollar value of combined earnings (from cash on deposit rather than lost in repayments) and savings (from complimentary benefits) will probably get your vote.

Will having a large balance on a 0% purchase card adversely affect my credit rating?

Probably only slightly, and only temporarily. A company called Veda is the main provider of credit ratings in Australia, and their list of data used (in calculating an individual’s credit score) is topped by payment defaults. Next comes the number of credit enquiries lenders make about you, and then the number and type of credit enquiries and requests for credit you make yourself. So, while the size of the credit you apply for may have an impact on your rating in the short term, any substantial credit you actually use and repay within the agreed conditions is more likely to improve your score in the long term.

How can I get the most out of the offer?

There are a few key things to do in order to make the most of the promotional offer.

  • Plan ahead: Once you have your new card you need to be clear on what purchases you want to make, accurately budget how much you can spend and repay each month, and make every effort to clear the balance within the introductory period.
  • Stay up to date: It is really important to keep up monthly payments, always paying more than the minimum required payment on your statement before the due date. Late or missed payments can result in penalties, even invalidating the offer that attracted you in the first place.
  • Be disciplined: You need to be disciplined with your finances, avoid over spending and stay within your budget. You should also avoid using your card for cash advances and other transactions that attract high rates of interest as these higher rates will usually be high enough to negate any savings made.

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