A guide to 0% Interest Credit Cards

0% interest credit cards can be a useful tool for spreading the cost of purchases, help manage your finances or getting on top of existing debt. They allow you to take out credit with 0% interest on new purchases or a balance transfer for a set amount of time.

As with any financial decision, it’s important to understand the terms and conditions so you can make sure a 0% credit card is the right option for you.

An Introduction to 0% Interest Credit Cards

As you might expect, 0% interest credit cards are credit card products that have 0% interest, which means you won’t pay interest on your purchases or the balance you transfer over.

However, the 0% interest is not quite as simple as it sounds—the 0% is typically only applicable for a set period of time, after which a set interest rate will apply if you haven’t paid off your card within that time and still have an outstanding balance.

In order to maintain the 0% interest status for the set period of time, there are certain terms and conditions that you must meet. Typically, you are usually required to stay within your credit limit and make the minimum repayment amount each month. If you fail to meet the terms of the agreement, you may risk losing your interest free period.

Types of 0% Interest Credit Cards

It’s important to review individual cards closely when you’re considering which one is right for you.

That said, TSB offer two main types of 0% interest credit cards:

Purchase credit cards: A credit card that you use for a period with 0% interest on your purchases. After a set period of time, the promotional phase will end and a set amount of APR will apply to any existing or future balance.

Our Platinum purchase card has up 25 months of 0% interest on purchases and up to 18 months 0% interest on balance transfers, at then 24.9% APR representative (variable).

Balance transfer credit cards: A credit card that allows you to transfer the balance of an existing credit card onto it, with 0% interest on that balance for a set period of time, some cards may charge a Balance Transfer fee which is typically added to your total balance to repay. Our Platinum balance transfer card has up to 24 months of 0% interest, then 24.9% APR representative (variable).

You can find more details of our different 0% introductory period credit cards at TSB here

Applying for a 0% Interest Credit Card

Applying for a 0% interest credit card is similar to any standard credit card application. Here’s what you can expect:

You’ll need to have your basic information handy, such as your name, addresses from last three years, contact details, and your banking info.
Some providers may also want to see proof of address, proof of identity, and existing banking information.
You’ll need to undergo a credit check.

Approval will be based on your financial history and credit rating. It’s important to note that you may not be approved for the full 0% introductory interest term, or the APR after the interest-free period ends may be different than advertised, depending on your circumstances.

Check Eligibility

Not everyone will immediately qualify for a 0% credit card. Some factors that determine eligibility include:

Age and address: You must be over the age of 18 and living in the UK to be eligible for a credit card from a UK bank.
Credit rating: Your financial history and credit score will determine if you qualify for a 0% interest credit card, as well as how long the interest-free period is.

Learn more about credit card eligibility and what to expect when borrowing from TSB.

Credit Limit

0% interest credit cards have a credit limit that applies to the 0% interest. This means you can spend up to your credit limit within the interest-free period without paying interest on your balance.

The credit limit will be determined based on the specific terms of the 0% interest credit card you’re applying for, along with your credit history and eligibility.

If you’re unsure on credit card limits, read our Money Confidence article to learn more

Managing your credit limit and balance is key to your financial health. Going over your limit may result in your card being cancelled, having to pay a fee, losing your interest-free status and can impact your credit rating.

If you’d like to learn more on what affects your credit score and how to help improve your credit rating, read our Money Confidence article here.

Benefits of 0% Interest Credit Cards

When used mindfully, 0% interest credit cards can be a great tool to help you achieve your financial goals.

If you’d like to spread the cost, use a 0% interest purchase credit card to make a large purchase, pay it off before the interest-free period ends, and pay zero interest on the amount you’ve borrowed.

If you already have balances across other accounts and want to consolidate your debt, a 0% interest balance transfer credit card could be a good option, you can transfer a balance to manage your finances. If you pay off the balance within the interest-free period, this can be a great way to reduce your overall debt.

Interest-Free Period

With 0% interest credit cards, it’s important to remember that the interest-free period will only apply for a set period.

This time limit will be established at the outset of the agreement. It may not be the period you saw advertised initially, as your specific terms may change depending on your circumstances and credit application.

After the interest-free period lapses, any remaining balance or future purchases on your card will be subject to a standard APR rate that you’ll have seen when you signed the agreement.

Purchases

With a 0% interest purchase credit card, you can make purchases up to the credit limit and without paying interest during the promotional period.

You will need to make monthly repayments according to your credit card agreement, but as long as you adhere to the terms of the card you won’t pay interest on your balance during the interest-free period.

A 0% interest balance transfer card may also allow you to make interest-free purchases up to a certain amount within the promotional period. Make sure to check your agreement carefully so you know exactly what you are able to spend and what the associated APR is.

Spreading Costs

To maintain your interest-free terms, it’s important to have a repayment plan in place from the start.

As well as making your monthly repayment minimum, look at the length of your interest-free period and the balance you owe to work out how much you need to pay off each month to clear your balance before the period ends.

Be mindful of your spending to ensure you’re keeping your balance as low as possible and your payments are made on time to keep on track each month.

Read our Money Confidence article on using credit if you’d like to learn more on using credit carefully

Balance Transfers

Balance transfers allow you to transfer the balance of an existing credit card onto a 0% interest card for a set period of time, so you can temporarily stop paying interest for the period with the aim of clearing your debt within this timeframe.

There are many different 0% interest balance transfer cards available. Each will have a limited amount that you can transfer over and a set interest-free time period. Other conditions will also apply. Typically, must meet your minimum monthly repayments and other terms set out by your provider or you’ll lose your interest-free status.

Once 0% balance transfer period is over, you’ll pay a set amount of APR on the remaining balance and any future purchases but once your promotional period ends you may pay a higher rate of interest on any new purchases.

Balance Transfer Process

When signing up for a 0% interest balance transfer credit card, start off by finding the right option for you. Consider the amount you want to transfer, the time period you’ll be able to pay if off within, the terms of the repayment process, and the standard APR rate that will apply after the interest-free period ends.

Once you’re ready to apply, you’ll need to provide the same information you would in any credit card application, along with details of your existing card and the balance you want to transfer.

If approved, the bank or card provider will take care of the transfer process and you’ll receive your new card once the agreement begins.

Transfer Fees

As part of the balance transfer process, your new credit card provider may charge a transfer fee when you make the request to move your balance onto a new card.

It’s important to read through your agreement to understand any associated fees and ensure making a balance transfer is still the best value for you.

Managing Balance Transfers

To make the most of your balance transfer, it’s important to start with a plan. Make sure you have a repayment schedule in place to pay off your full balance within the 0% interest period.

Familiarise yourself with the terms of your agreement so you know exactly when you need to make your repayments and what happens when the interest-free period ends.

It’s also key to make sure the APR that applies after the promotional period is over is something you can still afford, in the instance you don’t pay off the balance in time.

Monthly Repayments

Maintaining a consistent monthly repayment schedule on a 0% interest credit card is key to maximising your benefits and leveraging the interest-free period for your financial health.

Having this in place will allow you to stay on track to repay your balance and minimize your overall debt.

If you don’t make your regular monthly repayments, you will typically lose the 0% interest promotional period and your balance will immediately revert to the standard APR rate. Any balance that is remaining on your card after the interest-free period ends will also be subject to this APR rate.

Repayment Strategies

There are a few key strategies that can help you make the most of your 0% interest credit cards:

Work out how much you need to repay each month in order to clear your balance before the promotional period is over.
Set up a direct debit for this amount so you don’t miss a payment.
Check your balance regularly to monitor your repayment plan and ensure you’re still on track.

Impact of Missed Payments

If you miss a payment during the 0% interest period, you may be charged a fee and lose your interest-free status. This means your existing balance and future purchases will revert to the standard APR.

Penalties and conditions vary depending on the provider, so be sure to check the terms of your agreement carefully.

End of the 0% Interest Period

When the 0% interest period ends, your balance will be subject to a set APR rate that you agreed to when you took out your credit card. If you have not paid off the balance of your card, this new interest rate will apply to your existing balance.

If your card balance is zero, this interest rate will apply to future purchases that you make on the card.

Transition to Standard Interest Rates

After the period ends, your card will transition to a standard APR rate that was set as part of your agreement when you took out the card. The rate will vary based on the provider and your individual credit profile.

If you plan to continue using your card after the interest-free period has ended, make sure to compare your current APR with other card options that are available to you and check that you’re getting the best deal for your circumstances.

Learn more about payment options and ways to borrow at TSB.

Planning for the End of the Period

Preparing from the start is the best strategy. Whether you take out a 0% interest credit card for a purchase or balance transfer, be sure to have a plan for how much you need to repay and when you need to settle your balance by.

Keep up with your monthly payments and keep track of your payment schedule to ensure you’re on track to clear your balance before the interest-free period is over. Be sure to check your balance regularly to stay on top of your account and avoid overspending.

If your circumstances change, make sure you have a clear idea of what your repayment amounts will look like when your card transitions to the standard APR.

Transfer Fees and Costs

When reviewing your 0% interest credit card terms and conditions, look out for additional costs such:

Transfer fees: 0% interest balance transfer may be subject to a transfer fee from your new credit card provider.
Penalties: There may be fees or penalties associated with card activity, such as missed or late payment penalties or exceeding your card limit.

Different providers may have additional costs, so be sure to ask for a full breakdown before you sign your agreement.

Impact on Credit Score

A 0% interest credit card will affect your credit score depending on how you use it.

If you repay your balance in time and meet your regular payment schedule, a 0% interest credit card can have a positive impact on your credit score.

However, if you miss a payment and move onto the regular APR, this could reflect negatively on your credit score and could also affect how much you can borrow in the future.

0% introductory interest credit cards can be a great tool for managing your finances. It’s important to fully understand the terms of your agreement and make a clear strategy for how you’ll approach your purchases and repayments.

Learn more about our credit cards, or speak to one of our Money Confidence Experts to find out which lending options could be best fit for you.

18+ and UK resident only. Lending is subject to approval. Credit limits, promotional periods and interest rates will vary based on your individual circumstances.

To remain eligible for promotional rates you must stay within your credit limit and make your payments on time each month.