0% Credit Cards

Do it right and credit cards are the cheapest way to borrow, you can get 0% for a year, yet get it wrong and you'll be stuck in debt for years. This is a step by step guide, updated daily, to the cheapest credit cards for new borrowing, how to use them... saving you £1,000s

• Which card is right?
• Picking the Right Card
• The tart's solution
• Best Buys
• Longest 0% Deal: 12 months
• Long term low rate: 6.8% for LIFE
• Worried about rejection?
• Size of the Saving

Is a credit card right for you?

Debt isn’t bad, bad debt is bad. Yet in these recession and credit crunch hit times, all borrowing is tinged with the dark side, lose your income and debt will leave you in a nightmare. Therefore before choosing which card is right for you, watch out for the following....

• Want to cut existing debt costs?
  
  You don’t need this guide, which is about cards with cheap ‘purchases’ interest rates for new borrowing. Instead please read the Cheap Balance Transfers guide instead.
  
  
• Don’t use cards to supplement day-to-day spending.
  
  The huge worry about credit cards is they allow you to borrow willy-nilly, there's no structure. This is one of the reasons they’re the primary cause of personal debt crisis; many people simply use their cards to supplement their income.
  
  To correctly use a credit card, ensure all borrowing is planned, budgeted for and as cheap as possible. If you’re just grabbing it to ease the strain on your pocket, that's a mammoth danger signal, please read the Debt Problems guide before getting yourself into trouble.
  
  
• Have you budgeted and planned repayments?
  
  Always borrow as little as you possibly can. Yet it's not just about how much, but also how quickly you can repay. The quicker you can repay the cheaper it will be. Use the free Budget Planner to help.
  
  

• Don’t borrow your way out of debt.
  
  If you’re getting a new card to help ease existing debt, it's likely you’re going to make things worse. The old adage ‘never borrow your way out of debt’ still holds true. If you are having trouble making ends meet please read the Debt Help guide which will take you through debt issues step by step.
  
  
• Watch out, lenders bite!
  
  Credit card companies have an array of tricks to bite your cash. If you fail to repay in full, you'll pay interest on the whole amount. Miss a payment, or pay late and you can lose any cheap interest deals, be fined and hurt your credit score. Find out how to beat credit card tricks.

Who are they for?

Credit cards used correctly are cheaper than loans. Therefore if you need to make a planned purchase, have worked out your repayments, and what you can afford to repay, it's by far the cheapest way. Therefore do a full budget to see what you can afford, then make sure you stick to repaying the debt each and every month.

Yet to do this properly isn't just a question of getting the right card, it's about understanding how it works and how to avoid the massive pitfalls, and that's the point of this guide.

Pick the right type of card

To find out the best way for you to borrow, answer the questions below. They'll assess how you spend, and direct you to the relevant part of the guide.

. Will you pay your card off in full EVERY month?
Select NO even if you only rarely fail to do this

No

Yes

This means you pay interest, therefore the crucial job is to make that as cheap as possible.

The aim is to find a card with the lowest possible rate for PURCHASES. Don't confuse this with cards offering Cheap Balance Transfer deals, those are completely different and are only for cutting the cost of existing not new debt.

There are two types of purchases deals; the next questions will decide which is right for you

. Will you clear all the debts from spending on the card within a year?

Yes

No

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Pay off your credit cards in full each month without fail and you wont be charged interest (except in rare circumstances).

So, forget the interest rates and focus on the card that rewards you best for normal spending. (Read the Best Cashback Credit Cards article rather than this).

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. Are you likely to make a disciplined effort to apply for and change cards, on time, roughly every 9 to 12 months?

Yes

No

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Go for the longest new customer 0% For Purchases rate available, enabling you to pay off the debts without any interest cost.

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Forget tarting. Go for the 'Stable Relationship' option, picking a card with a consistently low interest rate for purchases, rather than a 0% rate.

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Go for the longest 0% for purchases rate as you're ready to become a Credit Card Tart, moving your debts to another special offer 0% rate when this one ends.

However this requires having a decent Credit Score, anyone with a less than perfect credit history should play safe and follow the 'No' answer.

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PURCHASE CARDS: Best Intro Rate

Be a tart. Use the card which offers the best introductory rate for purchases - hopefully at 0%

Article: Card For Purchases

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PURCHASES CARD: Lowest Standard Rate

If you prefer a 'stable relationship', stick to the credit card with the lowest possible standard rate.

Article: Card For Purchases

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Should you tart?: Keep your debt at 0%

While disloyalty is frowned on in relationships, it's lauded for consumers. Credit card tarts are people who shift debt from 0% deal to 0% deal to ensure the minimum possible cost for their debts. This is by far the cheapest way to use credit cards, but it takes discipline and a good credit score.

How to tart

If you're a new tart, the process is pretty simple.

• Get a 0% purchases card.
  
  This is a card that you can spend on, and all the spending will be at 0% for a set period; see the longest 0% deals below.
  
  
• Ensure you make the repayments.
  
  All 0% interest means is that there is no cost to the borrowing; it still needs to be repaid. You should ensure you make at least the minimum repayments to avoid being fined, or worse still having the 0% deal closed down meaning you need to pay the expensive standard rate.
  
  
• Move or repay the debt BEFORE the 0% period ends.
  
  At the end of the 0% period the rate will jump to the standard APR which will usually be a huge 10-20%. At this point you either need to have the card cleared or shift it to a new card with a 0% Balance Transfer deal. If you still haven't repaid the debt when that deal closes, shift it again.
  

To tart or not to tart?

Tarting is without doubt the cheapest method, but takes active management and you need to stay on top of it. If not there's a big warning...

Unless you shift the debt before the 0% period ends, it only takes a couple of months before all the gain is lost.

The other thing that's important to understand is that to tart, you're going to need a decent credit history, so it's important to Check Your Credit Rating, which can be done for free, before you start. Plus the nature of repeated applications can have an impact on your score.

So if you're going to take well over a year to repay and aren't good with money, or have a poor credit score, then it's best to stick with the best Long term low rate deal instead.

The Cheapest Credit Cards for New Borrowing

The choice is simple. Those who can pay off in under a year or are willing to tart, should go for a 0% deal. Everyone else should pick the cheapest long term low rate. All the following deals only apply to NEW cardholders. Also see the best cards for poor credit scorers section.

If your application's rejected, immediately check your Credit Rating. If you're accepted and the credit limit is too low, don't chuck the card, it's already on your credit file, simply apply for a second card to use alongside it; see the Low Credit Limit guide.

The Longest 0% deals

The primary aim is to find the card which will give you the longest 0% introductory deal. Sadly, other key factors such as acceptance criteria and credit limits are never public. The 'go to' rate that cards jump to after the 0% periods are also listed, but as these cards are only for tarts/quick repayers this hopefully won't impact you.

• The Top Card. 12 months 0% on purchases
  
  The longest deal available is with Tesco's Clubcard Credit Card, which gives a big 12 months interest free on new borrowing, followed by 16.9% APR.
  
  Spending with this also earns you 1 Tesco Clubcard point per £4 you spend. If these are redeemed for Tesco's 'Clubcard Rewards', then they're worth about 4p each. making this equivalent to a 1% cashback card. For more information, read Loyalty Schemes: How they work.
  
  Quick Stats. 0% length: 12 months. Standard Rate: 16.9% APR. Minimum Income: N/A Min Repay: Greater of 3% or £5 Anecdotal Info: Credit Limits: Mid. Ease of Acceptance: Mid
  
  
  
• Next Best Cards. 10 months 0% on purchases
  
  If you've already got a Tesco credit card, you'll need to apply for one from a different provider. The next best deals both give 10 months 0% on new borrowing, followed by 15.9% APR.
  
  Sainsbury's offers 10 months interest free on spending (12 months on Sainsburys goods), plus you get Nectar points when you use the card, although only 1 point for every £5 spent outside of Sainbury's. It also gives new cardholders 10 months 0% on balance transfers, for a 3% fee, which makes it the top 'All Rounder' card (read Balance Transfers for how this compares).
  
  Equal in length is Marks & Spencer's credit card, plus here you also earn loyalty points to spend in Marks and Spencer stores.
  
  Quick Stats
  
  Sainsbury's . 0% length: 10 months. Standard Rate: 15.9% APR. Minimum Income: N/A Min Repay: Greater of 2.25% or £5 Anecdotal Info: Credit Limits: Mid. Ease of Acceptance: Mid
  
  M&S . 0% length: 10 months. Standard Rate: 15.9% APR. Minimum Income: N/A Min Repay: Greater of 2.5% or £5 Anecdotal Info: Credit Limits: Mid. Ease of Acceptance: Mid
  
  
• The Best of the Rest. 9 months 0% on purchases
  
  Behind this, Play.com's credit card gives 9 months 0% (then 15.9% APR), plus loyalty points, including 1500 Playpoints (worth £15) when you spend £150 in the first 90 days; read full details of this in Credit Card Freebies.
  
  You can also get 9 months 0% from both Halifax* and Bank of Scotland* then 15.9% APR. Over 50s can get the Saga* card which gives nine months 0%, followed by 11.9% APR.
  
  Quick Stats
  
  Play.com. 0% length: 9 months. Standard Rate: 15.9% APR. Minimum Income: N/A Min Repay: Greater of £25 or £5 + charges Anecdotal Info: Credit Limits: Mid. Ease of Acceptance: Mid
  
  Halifax / Bank of Scotland. 0% length: 9 months. Standard Rate: 15.9% APR. Minimum Income: N/A Min Repay: Greater of 1% or £5 plus interest/fees Anecdotal Info: Credit Limits: Mid. Ease of Acceptance: Mid
  
  Saga. 0% length: 9 months. Standard Rate: 11.9% APR. Minimum Income: N/A Min Repay: Greater of 3% or £5 Anecdotal Info: Credit Limits: Mid. Ease of Acceptance: Mid
  
  
  

There's a devious trick some cards play if you have a 0% for purchases deal. Often they also allow you to shift debts to the card, but this can be at a higher interest rate. If it is, when you make repayments lenders bias them towards paying off the cheap debts first.

This means more expensive debts from balance transfers sit on the card locked in, speedily accruing interest but you can't start paying them off until the entire cheap purchases debts are repaid.

Therefore as a strict rule, Never Ever Ever balance transfer on a purchases card. Use a separate card instead (see Best Balance Transfers).

Cheapest long term low rate deals.

Here the aim is to get a card where the low rate is for the long term, not just an introductory offer. While not 0%, it does mean that you don't have to remember to shift from card to card, and know you've got a deal for the long term.

• Barclaycard Simplicity. 6.8% APR standard rate
  
  The lowest standard APR on the market is the Barclaycard* Simplicity, which charges 6.8%, though there are reports that it can give low credit limits.
  
  It's important to understand this rate is variable and could change. However, Barclaycard says there are no plans whatsoever to change the terms. I interpret that as meaning it should stay as a cheap non-switchers card for the foreseeable future, though the rate could vary slightly; so vigilance is always important.
  
  Quick Stats. APR: 6.8% Minimum Income: £20,000 Min Repay: Greater of 2.25% or £5. Anecdotal Info: Credit Limits: Poor - Mid. Ease of Acceptance: Mid
  
  
• Halifax Easy Rate. 8.9% APR standard rate
  
  Next cheapest is Halifax's* Easy Rate credit card, at a standard APR of 8.9% for purchases.
  
  Importantly though, this is a 'typical rate', which means it's possible you could be given a higher rate of up to 14.9% APR; not competitive AT ALL. Only apply for this if you have a good credit rating and normally get accepted when you apply for new cards.
  
  This rate is variable too and could change, so vigilance is always important.
  
  Quick Stats. APR: 8.9% Minimum Income: £10,000 Min Repay: Greater of 1% or £5 + interest. Anecdotal Info: Credit Limits: Mid-High. Ease of Acceptance: Mid
  
  
• Co-op Fixed Rate. 9.9% APR five year fixed rate
  
  Behind these is the Co-op's Platinum Fixed Rate card at 9.9% APR for five years. You'll need to be aged 25 or over, and have an annual salary of at least £25,000 to get this though.
  
  The rate of 9.9% is fixed for five years from when you get the card, after which there are no guarantees what will happen to the rate. If it does shoot up, and you still have debt remaining on it, you can shift it to a Cheap Balance Transfer card at that point.
  
  Quick Stats. APR: 9.9% FIXED for five years. Minimum Income: £25,000 Min Repay: Greater of 2% or £5. Anecdotal Info: Credit Limits: Mid. Ease of Acceptance: Hard
  
  

Can these cards be used for balance transfers too?

Often, though not always, on these cards the rate applies to debt that is shifted to the card. If that's the case, and you're looking for long term cheap debt it's likely to be reasonably competitive and there's nothing wrong with doing it. Though always compare to the Best Balance Transfers first.

Yet don't assume the rate automatically applies for all transactions, for example Barclaycard Simplicity charges a big 15.8% rate for cash withdrawals. So never, ever, ever use it (or any credit card) for withdrawing cash.

Worried about being rejected?

The cards listed above are the market's top deals. Some of them require a good credit score. If you're worried about this then there are still ways to get good deals.

• Check your credit score for free.
  
  Understanding why you may be rejected is crucial for picking the right card. So first use the Free Credit Check guide for a full explanation and how to check.
  
  
• If you've only limited/minor issues.
  
  The top cards listed above should still be accessible to you. Just avoid those where it notes they are particularly harsh credit scorers.
  
  
• Use a 'credit-worthiness' comparison.
  
  Those with only poor to moderate credit histories can use special credit worthiness comparisons. They don't do a credit search, as that itself would hit your credit score, instead they just ask a few basic credit history questions, giving a rough and ready assessment, followed by 'suitable cards'.

  These services don't cover all cards, so they're only for those people with credit issues. The top pick is Moneyextra*, which asks 5 quick questions and uses ‘soft searches’ of your credit file, which importantly don’t leave a mark (hence don’t hit future applications).

Someone spending £400 a month on a card (repaying £150 each month) on a First Direct Visa card at 17.9% would pay £300 interest in year one. On the Tesco card they'd pay nothing in the first 12 months.

Over three years the charge with First Direct is an enormous £2,800; Tesco, as the rate jumps to 15.9%, costs 2,200, but Barclaycard's 6.8% card costs only £1,000 while a good Credit Card Tart would pay nothing.