What happens when a 0% purchase offer ends?

credit cards

"I'm confused about the 0% purchases deal on my credit card. If I make a purchase during the interest free period, when will I pay interest on it?

0% purchases promotions are one of the most popular credit card deals, but they can be a bit difficult to get your head around at first.

Basically, during a 0% purchases period, the cardholder can make a purchase and, as long as some basic conditions are met, they won't have to pay it off for however many more months the promotion lasts for.

If the whole balance is paid off during the 0% period, no interest will be charged at all.

However, purchases will start to incur interest at the standard rate if they haven't been paid off before the advertised 0% period ends, or if the credit card terms and conditions are seriously breached.

Let's take a closer look.

Understanding 0% promotional periods

Here are the four most important things to know.

1. 0% on whatever is paid off

In our full guide to 0% purchases deals we list some of the promotional interest free deals available in the UK right now, alongside the length of the deal and the standard APR charged on purchases.

As we noted above, people can borrow with these cards without paying a penny of interest by paying off the whole balance during the months of the interest free period - and that's the best way to use these deals.

In addition, however, credit cardholders won't be charged interest on the full purchase price if they've repaid some of the balance before the end of the 0% offer.

For example, say a cardholder spent £1,000 on their 0% purchase credit card and paid back £500 during the interest period.

When the 0% period ends and the standard interest rate begins interest will be charged on £500, not £1,000.

All in all, the more of the balance can be paid off within the interest free period, the better.

2. Subject to conditions

As we mentioned above, it's important to remember that a 0% period is a promotional offer and the card provider has the right to withdraw it if certain conditions are breached.

If that happened, the cardholder would have their deal cut short and would have to start paying interest on the balance they ran up during the 0% period.

For example, offers can be withdrawn when:

Once offers are withdrawn, they're gone - the interest free period won't return the next month - so it's worth making sure to keep to the terms of the offer by, for example, setting up a direct debit to pay at least the minimum repayment amount each month.

3. Only purchases are interest free

We know, the clue's in the name but this could do with repeating: only transactions which count as 'purchases' will be interest free during a 0% period.

For example, cash advance transactions made with the credit card will typically be charged a handling fee of around 3% and the debt will start accruing interest straight away - usually at a higher rate - as cash transactions are not often included in the standard interest free period.

Note that a clause called 'allocation of payments' or 'payment order' comes into play here.

Different types of spending on credit cards accrue interest at different rates.

Credit card providers apply payments made to the account to the balance with the highest interest rate first before repaying other debts.

In terms of 0% promotions, that means that it's possible to clear a balance accruing interest at a high rate and then continue to use the special offer rate without a problem.

4. Not the same as standard interest free periods

Additionally, it's worth noting that promotional interest free periods are a special case.

Standard credit card interest free periods are another matter.

All credit cards have a standard interest free period. It commonly lasts up to 56 days and, in all but a few cases, only applies to purchases made on the card.

In this case, purchases would only be interest free when the previous month's balance has been repaid in full as well as the current month's balance.

This sounds complicated but it needn't be. Let's use the example above in the case of a normal credit card borrowing period.

The cardholder spends £1,000 and then pays back £500 within the interest free period.

They'll pay interest BOTH on the £1,000 (before £500 was paid) AND on £500 from the period the payment was made to the end of the statement date.

See our article here for a longer explanation on a credit card's monthly interest free period.

So when is interest charged?

To summarise, should everything goes ideally, when a 0% purchase cardholder makes a purchase they'll be able to pay it off in full without interest starting to be charged.

Because of the way the deals work, in contrast to standard interest free periods, this should be fairly simple to do.

On the other hand, interest may have to be paid before the 0% offer is scheduled to end if the cardholder breaks the card's terms and conditions or makes a transaction which isn't included in the promotional rate.

Comments

1
11 March 2016
Random

If I buy something with a promotional period say at best buy for 12 months. What happens with purchases done say at the groceries after that?

2
23 February 2016
Joe

If I have a new credit card and 0% for the first year but I do not use it for the first three months do I lose out on those months or does it start when I activate my card?

3
9 December 2014
Paul

Interest free period has just ran out, can I take another credit card interest free and pay off the balance for the old one? Would that be a purchase or would I need 0% on balance transfers?

4
3 February 2014
Anil

Barclays says that we have to wait until the date the statement is printed. So if my promotional period is finishing on 1st Feb, I have to wait until 24th Feb until my statement is printed and have to pay 24% for these 23 days.. Pl suggest.

5
26 January 2014
Sam8

My 0% interest period on purchases is coming to an end in May and also on the same card I have a 0% balance transfer period ending next year. Under the terms the payments each month have been allocated to the balance transfer balance only as it will beat the highest interest. Is it right that I should wait one day after the interest free period ends on the purchases and then pay off the full amount of purchases made so that I am only charged interest for one day? I will also still be charged no interest on the balance transfer?

6
21 January 2014
Rosiemo

You also need to know the date when 0% rate ends. Why don't credit card companies show this rate on the monthly bill? Some do but most don't.

7
4 January 2014
Tori

Hi I'd like to pay for our holiday on a credit card and am looking to apply. Please can you clarify. If I got one that boasts 12 months interest free, does this only apply if I pay the balance off in full each month? Or can I pay it off in instalments over the 12 months. And still not pay interest?

Please help I want to do the right thing and not get mislead. Thanks Tori

8
13 November 2013
Spud

Are promotional periods for a set amount of time or do they last forever?

I.e. if i take a 12 month interest free card in January would it revert to the standard offer the following January, or is it a 12 month period for each purchase ever made?

9
9 September 2012
Kay

Hi Justin

I hope you can help me as I can't seem to find the answer to my question anywhere. I understand the concept of 0% interest rate for a CERTAIN TIME PERIOD, so its best to pay all debts off within this period. BUT what I would like to know is what happens next????

I am someone who is meticulous about paying of my credit card bill ASAP; as I do not like or trust credit cards, but they are a necessity sometimes. I only have 1 card and the 0% offer runs out in November. What I would like to know is if I am someone who pays my bill on the day it comes via any method possible, then will I incur the 15.4% APR on any purchases I make after November?

Please help as some of the info regarding credit cards seem to indicate that after the 0% interest period. The APR would be charged on purchases/per annum? I'm really confused is this true, even if you pay staright away?

Thanks.

Kay

9 September 2012
Choose team

Hi Kay,

Please see this article for further information that may help explain the standard interest free period: <a href="/money/guide/faqs/credit-card-interest-free-period.html" rel="nofollow noopener">click here</a>.

Hope this helps.

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