What happens when the 0% period on my card is over?

If I make a purchase on a credit card during a 0% promotional period when will I be charged interest on it?

Credit card interest rates can be difficult to understand but it's worth taking the time to check whether they'll be charging interest before banking on having a long time to pay back the balance in full.

0% purchase periods

When a credit card's 0% purchase period ends, any remaining balance will start to incur interest at the standard rate.

That means 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, if you spent £1000 on purchases during the 0% period and paid back £500 before the 0% period ended, when it began the standard interest rate would be charged on £500, not £1000.

It's important to remember that a 0% promotional period requires all other credit card terms to be adhered to, or the offer could be withdrawn.

Even when a 0% offer is in place, cardholders must make at least the minimum repayment on their credit card balance each month.

Additionally, with a 0% purchases deal it's important to keep an eye on your credit limit - exceeding the limit can see the offer withdrawn as well.

See our guide to 0% purchase credit cards for more information on the deals and how they work.

Standard interest-free periods

However, 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 example, 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.

Respecting the hierarchy

It's also worth being aware of a credit clause called 'allocation of payments'.

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

Normal spending - such as retail purchases - would be added to the same balance in the example here.

However, cash withdrawals with a 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.

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

If a credit card has a higher interest balance, then, and the full payment can't be made, it's worthwhile paying off this amount at least to reduce the overall interest charged.

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