Understanding Purchase Credit Cards
What is a purchase credit card?
Purchase cards are tailored towards customers who wish to make a purchase but cannot make the full repayment within the first month. By choosing a card with a 0% on purchases deal you are allowing yourself a longer period to pay off the purchase without any negative connotations, think of it as a buy now, pay later option. A big purchase could also allow you to earn some rewards so you get someithing back from your spending, like cashback or airmiles. Another benefit of using your credit card to purchase an item of value is the Consumer Protection (section 75 of the Consumer Credit Act) that comes as standard with a credit card purchase over £100. This protection can help you if the worst were to happen and the company you purchased from goes bust before sending you your item for example. To find out more about credit card protection and it's other benefits take a look at our consumer credit protection article.
Is a purchase credit card the right card for me?
A purchase card could be ideal if you have a large purchase to make as it gives you some breathing room when it comes to the repayment. So if you are thinking of going on holiday, remodelling the kitchen or have your eye on the wedding dress of your dreams a 0% purchase card may be the right credit card for you
A number of card issuers offer zero interest purchase deals, some providers who usually offer longer introductory periods are Barclaycard, Sainsbury's Bank, Tesco Bank, NatWest and Royal Bank of Scotland.
Credit Profile for purchase credit cards
What type of profile do I need to get the purchase card I want?
The purchase credit cards at the top of our tables will usually require you to have an excellent credit history. If you are unsure of whether you are likely to be accepted for a card you can use our free Card Matcher tool to check which credit card is right for you before you commit to making a full application with the provider.
How do credit card issuers use my credit profile?
Credit card companies will use a person’s credit profile when they apply for a card, and will also use the information in helping them manage the credit limits of existing customers. Credit card issuers have two main goals when it comes to assessing a customer’s credit profile, both in relation to new customers applying and existing customers. Firstly, they want to ensure they are lending responsibly, so customers don’t end up with debts that they are unable to afford. And secondly, they want to ensure they are lending to customers who are reliable and therefore likely to repay their borrowing. The credit profile provides information that can help the issuer in making that assessment.
Glossary of key terms for purchase credit cards
Purchases
This is where you pay for goods or services using your credit card – it doesn’t not 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 intro rate is applied for. So for example a 0% purchase intro 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 intro rate ends
then you will be charged interest at the cards 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.
Available credit
Your current credit limit minus your current outstanding balance.
Cash advances
You obtain a cash advance by using your credit card to draw cash. Cash advances will invariably attract interest from the moment they are made, so there is no “interest free” period of grace.
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.
Cash Advance rate
This is the rate of interest attracted by your cash advance. As noted above, interest is invariably attracted from the moment it is made and the rate of interest for this facility could be higher than the card provider’s standard rate on regular purchases..
Credit Card Issuer
This is the company who provide the ability for you to use your credit card in shops and online. The three main issuers are Mastercard, VISA and American Express.
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.
Joint Account Holder
Unlike an authorised user a Joint Account Holder has the same bortrowing priviledges as the main account holder but they too will be responsible for the repayment of the account balance.
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.