0% Purchase Rate Credit Card

[Granty]

Im considering applying for a 0% purchase rate credit card to spread a big payment over a year (or so) at no cost. Good or bad idea?

Im looking at getting one with >9 months at 0% and intend on paying it off in that time. Is there anything I should look out for or avoid? I've seen the cashback schemes also but it seems to be one or the other.

Cheers dears.

[robwhizz]

Try a read of this:
http://www.moneysavingexpert.com/cards/best-0-credit-cards#deals

I haven't read it, but the site is normally pretty good.

[yawner]

We have quite a few  0% credit cards. They're fine so long as you can shift the balance across to a new 0% card before the interest eventually kicks in. This works only so long - you soon run out of new credit cards, so sooner or later you have to be confident of repayment.

They've been a handy way for us to fund refurbs to Yawner Towers without being answerable to the banks. Friends who also have a B&B thought we were foolish, and funded their refurbs with an £60k overdraft.... which the building society decided to call in when the financial market went titsup.com. Thats a lot of dosh to find in a hurry.

So yeah, go for it, but remember if you don`t pay it all back within the zero term, you'll either have to find another zero percent card and transfer, or get blasted with interest.

[Granty]

Cheers robwhizz, I had visited moneysupermarket but not moneysavingexpert. Thanks Nige also.  

I was having a gander on the way home from Cornwall and applied for a cc with Tesco in the end.  They offered me a card with a £3k limit (which may increase) but it failed on the stage where I had to choose a password.  Tried again just now and the service is unavailable so I better ring them with my reference and make sure they haven't given me any black marks for applying again!

I have always been against credit cards (I have two from my uni days - zero balance) but it makes sense to take advantage of the 0%.

Spending with Tesco earns clubcard points to which is handy as their Reward Scheme is pretty good.  We recently transferred £15 in Tesco vouchers for a £60 meal voucher.  I may have to purchase a new laptop now..  

[sarahA]

I used my new M&S card (new at the time) to purchase my car. I had a £6k limit so put £5.5k of the car on it and got around £27.50 back in M&S vouchers (love their food!). After 9 months I then just transferred it to another card.

I've played the 0% balance transfer game for the last 8 years and a lot of cards have realised that to keep people they need to give out new interest offers every so often so I've not had to get a new card since as usually either my capital one or virgin card is doing some sort of 0% offer whereby I could either transfer a balance, handy until i paid my debt off and then recently I had a 10 mth deal onmy virgin card by which I put half the wedding cost on it so I don't need to worry about paying it off until April next year.

Useful if you can control your finances and not use the card for anything else.

[net-curtains]

I'm not a big fan of credit cards but signed up to an American Express card a few months back. I used it to buy a laptop and a few other bits of equipment and received 5% cashback on everything I spent. I've kept the balance topped up so I won't pay any interest, and I'll cancel it at the end of the year and take the £100 cashback with me. Free money!

[samhs]

<used to work in a bank head> Can I just pitch in on Nige's enthusiasm for credit cards over overdrafts. Credit cards are also repayable on demand, so don't think that it's more secure debt in any way than an overdraft. The *only* difference is that you don't have it explicitly linked to your bank account - but your lender(s) could just as easily demand immediate repayment at any time.

That said, it's unlikely in both scenarios - your friends were either very unlucky, or there's something else been going on - most banks, even if they're feeling the strain themselves, will try to be reasonable and structured in reclaiming debt; it's in their interests to keep you solvent.</used to work in a bank head>

[yawner]

<used to work in a bank head> Credit cards are also repayable on demand, so don't think that it's more secure debt in any way than an overdraft.

it is when you have the amount spread over several credit cards and several banks

- your friends were either very unlucky, or there's something else been going on

Maybe, but we're aware of a few businesses just in our locale who had similar experiences. Times are unusually tight, All the banks that have money are hanging on to it, while many others are trying to claw it back. At the very least (as other acquaintances discovered) with an overdraft, the bank may want more of a say in how you're running the business. That doesn`t happen with c-cards. 

Many small business prefer to get credit in this way, rather than involve the bank on a formal basis. Its not an ideal state of affairs but hey.

Hopefully this time next month our card debt will be zero - We have a multi-millionaire staying this weekend (I'll post about him after he's gone). Our tongues are about to fall off with all the bum licking we've been doing. 

[ih8mondays]

I was moving balances around for at least 6 years, however 2 years ago I cleared my credit card debt and now pay back the full spend most months. Also finished paying a personal loan off recently, so just the student loan left now (which I think is at 0% interest or somewhere near that figure)

I've had about 20 credit cards, and I've took out some credit cards from the same companies that I'd used a few years before - you'd think they'd learn!

[sarahA]

I was moving balances around for at least 6 years, however 2 years ago I cleared my credit card debt and now pay back the full spend most months. Also finished paying a personal loan off recently, so just the student loan left now (which I think is at 0% interest or somewhere near that figure)

I believe that if you graduated before 1998/9 or somewhere round there, then either now or soon the interest on a student loan is actually in negative equity. Check on Martin's money saving tips site for more info on student loans. So in theory the loan will start to reduce!

I've had about 20 credit cards, and I've took out some credit cards from the same companies that I'd used a few years before - you'd think they'd learn!

Usually if you've not had an account with them or their parent company (in the case of MBNA that owns a lot of various named cards) for a year then you can usually sign up as a 'new customer' as opposed to a returning one. But as I mentioned, these days it's worth phoning around your existing card companies if you need to transfer a balance and play one off the other. They'll always charge a fee so it's whoever wants the fee.

But it's a nice feeling to pay off the debt

[ih8mondays]

I believe that if you graduated before 1998/9 or somewhere round there, then either now or soon the interest on a student loan is actually in negative equity. Check on Martin's money saving tips site for more info on student loans. So in theory the loan will start to reduce!

Not for me, I'm on the new style loan 

[sarahA]

I believe that if you graduated before 1998/9 or somewhere round there, then either now or soon the interest on a student loan is actually in negative equity. Check on Martin's money saving tips site for more info on student loans. So in theory the loan will start to reduce!

Not for me, I'm on the new style loan 

Ah ok, sorry! Although I do believe they've stayed at a cheaper interest rate than the old style so it'll balance out probably   (I don't have a clue tbh, I'm just making it up!!)

[sickpuppy]

Hopefully this time next month our card debt will be zero - We have a multi-millionaire staying this weekend (I'll post about him after he's gone). Our tongues are about to fall off with all the bum licking we've been doing. 

Multi-millonaires don't become that rich by throwing their money around, save your tongues.

[Matt]

My bank has told my partner they are taking away her overdraft, and tried to knock £300 off mine recently, Im assured it was just their system being over panicky, and that I can keep mine where it is, and partners can be lowered gradually (she is never out of it so...)

I cant even get a credit card anymore, I think its because all of mine are damn close to the limit and I missed  a single payment on two cards oin the same month (thought I ahd paid it, and hadnt(!))

[sandman]

one thing to watch out for ...

i got a card from somewhere ... think it was a sony card ... and it was 0% on purchases for the first 3 months (the 0% rate lasted for a year), however, ANY purchase made after the 3 months were charged with interest, problem being that the part your paying the intrest on comes off the bill last, not explaining this well am i ?

bought say £1000 of stuff intrest free, ok no probs
3 mths later bought £200 of stuff ... this is where they add the intrest
but any payments made comes off the bigger balance, so untill you pay off the whole 1000 quid your still going to be charged intrest on the 200 quid.

short answer ... if you do use your card to buy something and intend to pay it off within the intrest free period then CUT THE CARD UP once you have bought said items

[Granty]

Thanks for all you input, duly noted your words of warning.

I spoke with Tesco Personal Finance.  The application I made on my phone went through so I should have the card soon.

[sarahA]

@sandman - yep that's always the way. Any credit payments will pay off the cheapest amount (interest wise) first regardless of order.

The Money saving expert site that was linked to earlier is a great resource and explains how to control finances for using 0% interest, 0% on balance transfers etc.

However I don't agree with this:

if you do use your card to buy something and intend to pay it off within the intrest free period then CUT THE CARD UP once you have bought said items

A card doesn't just have a deal at the start of use. I finally paid off my car at the start of the year, and had no use for my Virgin card. I've had no use for my Capital One card for over a year now either. However, I've got a decent credit limit and figured it was worth holding on to them. In July Virgin wrote to me and said any purchases over £250 made before the end of the month would be 0% until April 2010. Any purchases under would be 1.9%. I've also twice had deals with Virgin where I could get 0% or 1.9% on balance transfers for 9 months. They're desperate to keep customers so they don't want you closing your account.

Unless, of course, you have no will power and think you need to spend any credit you have, then of course close the account, but otherwise, there's no harm in keeping them. It's not going to cause your credit rating to go down.

These days it's harder to get a card as the companies have started to tighten their belts and stopped giving them out to everyone and their dog, so by closing a card down you may find you're stuck later down the line if you get refused elsewhere.

[ih8mondays]

one thing to watch out for ...

i got a card from somewhere ... think it was a sony card ... and it was 0% on purchases for the first 3 months (the 0% rate lasted for a year), however, ANY purchase made after the 3 months were charged with interest, problem being that the part your paying the intrest on comes off the bill last, not explaining this well am i ?

Yeah, quite a few cards seem to do this - best to have a couple of cards at a time!

Another trick seems to be "minimum interest" these days - say the interest works out to 20p, some card companies will round that up to a nice 50p, or perhaps a £1...

[yawner]

Lets face it, when push comes to shove they're all..