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The complete low down on 0% purchase credit card deals - from the current longest offers through the loopholes and the terms to watch out for.

The longest 0% purchases offer

Let's get the main question over with first - the current longest 0% period on purchases is 15 months, and is available with the Tesco Clubcard or with M&S credit card [visit M&S for cost of credit].

The Tesco Clubcard credit card (see below), also offers Clubcard points on all spending, if you're into travelling - these can be turned into Avios airmiles as well as money off groceries and other partner rewards, so they a good plus for large initial spending.

Tesco Clubcard credit card
	0% purchases for 15 months	Apply here »
Representative Example: 16.9% p.a. variable on purchases. This is equivalent to 16.9% APR representative variable based on a credit limit of £1,200. Tesco Bank, PO Box 5747, Southend on Sea, SS1 9AJ.

You can compare more 0% purchases credit cards here.

How 0% purchase credit cards work

A brief 101 - the basics are simple enough - 0% interest on new spending for an initial period of time.

Unlike 0% balance transfer credit cards, there are no 'window periods' for that spend, although the 0% period will run from when the account is opened so there is only ever a finite period interest free.

As long as you stick to purchase transactions (see below for more on this) there aren't any additional fees to pay, and as long as you stay within the terms of the deal (minimum repayments and not exceeding the credit limit) there won't be any interest charges for the duration of the offer.

At the end of the 0% purchase period the standard interest rate will start to apply and any remaining balance will incur interest immediately.

We've answered this topic a little more fully in a knowledgebase faq on what happens when the 0% period ends, but basically this is because 'standard monthly' interest free periods require the previous month's balance to of been paid in full as well as the current month's - so when coming off a 0% purchases period, the previous month's balance wouldn't of been cleared in full and so the standard interest free period won't apply.

In short though, as with any 0% deal, it's always worth working out a repayment plan for the duration of the offer and aiming to clear the debt before the 0% rate ends.

Potential problems

Generally speaking there aren't any 'hidden charges' to watch out for with 0% purchase credit cards. However that does largely depend on how you use the card.

Potential problems that can arise from using 0% purchases credit card deals have diminished since a recent change in the law restricting how credit card providers must allocate the payments you make to your debt.

However, unsurprisingly the credit card providers have found some loopholes and so certain cards still need to be approached with caution.

The potential problems:

1. Withdrawing cash and the definition of a purchase

In 8 years of covering the credit card market we've not seen one 0% purchases promotion that included cash withdrawals - so these ought to be avoided as they won't be included in the 0% offer.

It's also important to be aware of what constitutes a cash withdrawal, as the definition can include some less obvious 'purchases' as well.

Check the individual credit card's terms, but cash transactions commonly include:

• Withdrawing money from at ATM or over the counter at a Post Office or bank.
• Getting 'cash back' with a purchase can also sometimes be classified as a cash withdrawal instead of part of the purchase, so it's worth avoiding.
• Buying foreign currency, including traveller's cheques.
• Buying shopping gift vouchers.
• Spending any money at a casino or gambling establishment - including buying normal 'purchase' items, such as food or drink. Lottery tickets and online websites are also included here - so be aware of what you're buying online, playing a game of online bingo for example is actually likely considered a cash purchase.
• Cheques and money transfer transactions are also either classified within cash or within a separate bracket, but rarely if ever as purchases.

Additionally, fees and charges your account is subject to won't be included in the 0% interest rate. Handling fees for cash transactions and interest accruing from the same are two examples of these kinds of fees.

2. Using in conjunction with a 0% balance transfer offer

As mentioned the law has recently changed in this area - however it still needs to be approached with caution.

All credit card providers now allocate payments to the highest rate balances first but, when there are two 0% deals, some allocate to the highest 'go to' (usually the balance transfer) which means it's difficult to avoid paying interest.

Generally speaking if you need to use a credit card for both a 0% balance transfer as well as new spending at 0% it's worth comparing deals offering equal length 0% balance transfer & purchase offers.

3. 0% purchases are incentives not product terms

As an incentive of the product it can be withdrawn if you don't keep up your side of the deal.

Withdrawal of the offer will mean any outstanding balance returns to the standard interest rate. Default charges (around £12 for each default) are likely to be added as well.

Minimum monthly payments are a requirement of the offer, as is keeping within the credit limit - something to be more aware of if making a lot of new purchases and not clearing the full balance each month.

Budgeting and managing repayments

Setting up a direct debit to pay at least the minimum amount each month is the safest way to ensure payments are never missed or forgotten.

Choosing the minimum, while not the amount you should really only pay, is just a useful way of giving yourself more flexibility to then pay over this when you can.

The direct debit will take care of the exact amount also, as minimum payments are set as a % of the balance outstanding and change from month to month.

The minimum of minimum's is now set out by law too - and will be at least 1% of the balance owing, plus any interest, fees and charges added to the account that statement month.

During 0% offers this effectively means the minimum is likely to be at least 1% of the outstanding balance - as there is no interest being charged.

This is a small amount, just £50 of a £5,000 balance, and so it's important to budget and over pay or the spending will barely be dented by the end of the 0% period - in 12 months the balance would only have reduced to £4,400.

Additionally, keep in mind due to the new minimum repayment law, which adds on interest separately to a percentage of the balance owing, when coming off a 0% rate the minimum repayment can shoot up to cover the standard interest charge.

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