Purchase credit cards

About Purchase Credit Cards

What is a purchase credit card?

A purchase credit card is a card that offers a special rate on all spending. They often offer zero per cent introductory rates, with some offering up to 18 months before any interest is charged, enabling you to spend and to spread the payments over a period of time. Spending on a purchase credit is a way to borrow money for free – you can use your card to pay for an item, the credit card company fulfils the payment allowing you to pay back the credit card company at a later date.

Are there are any drawbacks to a purchase card?

Whilst a purchase card is a great way to spread repayments over several months, the zero per cent offers can be withdrawn if you don’t keep up on minimum payments (typically 3% of the balance plus any fees), making the cost of borrowing rise substantially. Often, as part of your application you’ll be given the opportunity to set up a direct debit to pay the minimum each month, ensuring you meet the criteria to keep the offer.

It’s also worth considering how long it will take you to pay the balance, for example if you purchase an item worth £2,500 and pay the minimum each month it will take you longer than any introductory period to clear the balance. After the initial period the rate will increase and you’ll start to be charged interest on the balance, it’s then at this point you could complete a balance transfer and move the balance to a new credit card, or alternatively set up a direct debit to a fixed amount each month to ensure that the balance is cleared before the end of the promotional period.

Can anyone get a purchase credit card?

Purchase cards are typically aimed at those with good credit rating. If you are struggling with payments and are considering a credit card then a purchase credit card may not be the card for you. You can use our free Card Matcher tool to check the likelihood of being accepted for a card before you apply.

You can also check your credit rating for free to find out what you can do to make sure you get the credit you want.

Which providers offer purchase cards?

Many credit card providers offer cards with zero per cent introductory rates on purchases, but typically the longest introductory periods are provided by Barclaycard, Nationwide, Bank of Scotland and Halifax.

Key Purchase Credit Cards Terms

Cash Advances

You obtain a cash advance by using your card to draw cash. Cash advances will invariably attract interest from the moment they are made, so there is no 'interest free' grace period, and the rate of interest for this facility could be higher than the card provider’s standard rate on regular purchases.

Cash Advance Fee

You will also be charged for using your card to draw cash. The charge might be made as a flat-rate fee on each withdrawal or taken as a percentage of the amount of cash advanced.

Credit Limit

This is the maximum amount that your credit card company will allow as credit i.e. a limit that cannot be exceeded as the balance owing on your credit card. You can calculate your outstanding balance by subtracting your current outstanding balance from your credit limit.

Purchases

This is where you pay for goods or services using your card– it doesn’t include things like cash withdrawals, cash advances or money transfers.

Purchase Introductory Rate

This relates to the interest that is applied to any purchases made and the duration that the introductory rate is applied for. So, for example, a 0% purchase introductory rate for 12 months will mean that no interest will be added to your account for any purchases made for 12 months from the date the account is opened. When the introductory rate ends then you will be charged interest at the card's annual percentage rate (APR).

To ensure you maintain any introductory rates applied to your account you must manage the account in line with the issuer’s terms and conditions. Specifically, that means that you must always make at least the minimum payment on time each month, and must remain within your set credit limit.

Withdrawal Limit

This relates to cash advances and is the maximum you can withdraw, either at a cash machine or over the counter at a bank, in any single day.

Providers

We offer an independent service to compare all UK credit cards. Click below for more information about some of our providers:

• AA
• American Express
• Aqua
• Bank of Scotland
• Barclaycard
• Capital One
• Creation
• Fluid
• Granite
• Halifax
• HSBC
• Lloyds TSB
• M&S
• Luma
• MBNA
• Nationwide
• Natwest
• Play.com
• Post Office
• RBS
• Sainsburys
• Santander
• Tesco
• Vanquis
• Virgin