What are the best points credit cards with 0% interest on purchases?

The current marketing gimmick among credit card companies is to offer 0% interest on new purchases for a long period of time.

0% interest offers on balance transfers – albeit usually with a 3% fee – have always been popular but only work for people who carry a balance.  Those people are less likely than average to be Head for Points readers.

‘0% interest on purchases’ is valuable to anyone, however.  There is no need to pay your bill, apart from the minimum repayment, each month.  You can spend up to your credit limit and then settle the entire bill in two years or so, just as your 0% period comes to an end.

(You should only do this if a) you are 100% certain to have the money available at the end of the 0% period and b) you trust yourself to remember when the 0% period is coming to an end.)

Keep your money in the bank for an extra two years or so and you would generate an extra return for yourself.

What are the best options?

According to MoneyFacts, the best 0% deals on purchases are currently offered by loyalty credit cards, which is handy!   This allows you to earn points as you run up your purchases.

Best deal on the market against which you should judge the rest:

The best deal on the market is the Sainsbury’s Bank Nectar Purchase Credit Card (representative APR 18.9% variable) with 29 months of 0% interest on purchases.

The Nectar earning rate on this card is poor, however, at just 1 point per £5 spent.  That is just 0.1% back!  At Sainsbury’s, you earn a far better rate of 2 points per £1.

This card also has a sign-up bonus.  If you spend £250 in Sainsbury’s, either on food or fuel, in the first 40 days of having the card you will receive 5,000 bonus Nectar points.  These are worth at least £25 and possibly more if you save them for a special redemption offer.

Tesco Mastercard credit card

2nd best interest-free period on the market:

The second best deal is more interesting from an Avios perspective.  This version of the Tesco Clubcard Credit Card comes with 0% interest for up to 28 months.  The representative APR is 18.9% variable.

You earn 1 Clubcard point for every £8 you spend, rounded down to the nearest £8.  At 2.4 Avios per Clubcard point, you are getting a headline 0.3 Avios per £1 spent albeit you need to factor in the negative impact of rounding which will reduce this figure.

There is no sign-up bonus with this version of the Tesco Clubcard Credit Card.

Other Avios earning option – with sign-up bonus and no annual fee:

This version of the Tesco Clubcard Credit Card comes with 1,000 Clubcard points – worth 2,400 Avios or 2,500 Clubcard points – for signing up and making one purchase or a balance transfer.  You only get 17 months of 0% interest on new purchases, however.

The representative APR is 18.9% variable.

Lloyds Avios Rewards 2

Other Avios earning option – with annual fee and no sign-up bonus:

The Lloyds Avios Rewards card comes with 0% interest for 24 months on new purchases.  The representative APR is 23.7% variable including the £24 annual fee.

This is a dual pack of an Amex and a MasterCard.  You earn 1.25 Avios per £1 spent on the Amex and 0.25 Avios per £1 on the MasterCard.  The Amex rate is doubled for the first six months.

There is no sign-up bonus on this card.  The refer-a-friend deal appears to have been suspended on 31st December.

Other Avios earning option – no annual fee, sign-up bonus but strict earning requirements:

The HSBC Premier Credit Card requires you to have a HSBC Premier current account.  This is free but requires you to have substantial savings with HSBC or a £100,000+ salary.  Representative APR 18.9% variable.

The card offers 9 months of 0% interest on new purchases.  The Avios earning rate is excellent – you get 0.5 HSBC points per £1 spent (1 point per £1 for foreign spend) and these convert 1:1 into Avios or various other airlines.

Until 28th February, there is a sign-up bonus of £25 for taking out the card and making your first purchase.

Lloyds Bank Choice

Other Avios earning option – with annual fee and no sign-up bonus:

The Lloyds Choice Rewards American Express and MasterCard package lets you earn Avios if you convert your Choice Points.  The earnings rate is 1 Avios per £1 on the Amex and 0.2 Avios per £1 on the MasterCard.  The earning rate on the Amex is doubled for the first six months.

The card offers 24 months of 0% interest on new purchases.

The representative APR is 23.7% variable including the £24 annual fee.  As the earning rate is worse than the Lloyds Avios Rewards cards, with the same annual fee, we tend not to discuss this card on Head for Points.

Conclusion

As you can see, you don’t have to sacrifice Avios points if you want to take out a credit card offering 0% interest on new purchases.

Which card is best for you depends on your personal preferences on annual fees, the length of the 0% period you want and the rewards you want to earn.

Disclaimer: Head for Points is a journalistic website. Nothing here should be construed as financial advice, and it is your own responsibility to ensure that any product is right for your circumstances. Recommendations are based primarily on the ability to earn miles and points and do not consider interest rates, service levels or any impact on your credit history.  By recommending credit cards on this site, I am – technically – acting as a credit broker.  Robert Burgess, trading as Head for Points, is regulated and authorised by the Financial Conduct Authority to act as a credit broker.

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Comments

  1. Given the current low interest rates on savings stoozing does not generate much of return at the moment. You might be better off with an Amex cashback card if you prefer money over points. Including the bonus in first months this might gain more return.

    • Wally1976 says:

      You can still earn reasonable interest rates (admittedly on moderate sums) if you are willing to have lots of current accounts and keep moving money between them plus associated regular savers. Unfortunately Lloyds are dropping their club Lloyds rate to 2% today (still have 4% regular saver I think), but there’s still a few around eg Tesco (2 accounts each at 3% up to £3k), Nationwide FlexDirect (5% on £2.5k but only first year) with 5% regular saver, TSB, First Direct and HSBC regular savers etc

      • 3 or 4 years ago I was chastised by Rob(Raffles) for stoozing, although it was far more profitable for me than collecting Avios has ever been.

        However, stoozing into high interest current accounts is only worthwhile if it would give you extra cash to put into savings.

        People who Rob considers “more likely than average to be HFP readers” probably already have £25k of cash in savings and are in the higher rate tax band.

        This is true for me, so I have already maxed out all the current accounts and savers that pay 1.5%-6%. Any cash that I generated from stoozing would go into my unlimited 0.7% saver, which becomes 0.42% after tax (notwithstanding the savings personal allowance which I have also maxed out).

      • The lloyds saver dropped to 3% a few months ago, nationwide does a 5% max £500/month which I now use instead of then lloyds one, requires a nationwide current account though

  2. The Lloyds avios rewards card offers 0% on purchases for 24 months with NO handling fee so it’s totally free money!

  3. Rob, tesco premium credit card comes with 6 months interest free on purchases.. Cheers

  4. To be clear, the advantage here is not necessarily to repay after the 0% period ends, it is to shift the balance to another card offering a 0% balance transfer for its own fixed period, and so on ad infinitum.

    • Except most 0% balance transfer offers still charge a one-off fee for the balance transfer. I’ve yet to see a balance transfer offer that makes sense, instead of just paying it off.

      • There were plenty between say 2012-2015, and also back in the “good old days” of Chancellor Brown. Tesco itself had a 0% BT card with 0% BT fee in 2013, which I took out.

        In the past I would pay BT fees up to 1%. If it’s a 24 month offer and savings accounts are paying more than 0.5%, then you have made the fee back (on sufficiently large balances otherwise the min payments over the stooze period need to be factored into the calculation).

        I don’t do it any more because nowadays, bank interest rates are near to 0 and as you say, the one-off fees seem to invariably be 3%. And it’s only worth doing on *extra* money (see my comment above which I have not yet written).

        I had about £30,000 stoozed at one point (way more than my income) which was earning >£800 interest per year after all the card fees. This was around 40% of my total credit limits and didn’t seem to affect my creditworthiness.

      • Halifax 24 month 0% with no fee and £25 or so of cashback did it for me 😉 Nationwide also offers no fee 0% balance transfer card with 12 months 0% on purchases and 0.5% cashback on purchases. Only available to current account holders, but then they’ve got 5% interest on up to £2.5k in your current account so worth having one anyway!

  5. Brighton Belle says:

    Presumably your credit score takes a massive hit carrying a large balance for many months and the odds of approval and churning other cards goes down.

    • Not really, what would start to push your score down is high levels of available credit utilisation, but having for example 30k of available credit and using 5k of that is very unlikely to cause a problem. Of course that doesn’t mean you want to do it if you’re about to apply for a new mortgage.

    • There is no credit score in the UK. Each financial institution has its own criteria for approving card applications.

      Carrying large balances may look good to a bank which wants to earn lots of interest from you.

      Gavin is also correct. If you don’t go over more than half of your available credit limit then you are less likely to have any problems.

      • MSE say that getting credit is like dating. Some men like women with big bums (that’s my one), some banks like people with high balances. Different strokes for different folks.

        • the_real_a says:

          Exactly – if you carry a large balance, then you are exactly the customer a provider of a “balance transfer” card will be interested in. You are more likely to be turned down for a card designed for “purchases”

    • the_real_a says:

      Its better to think of credit scores as a calculation of what is “normal” for you. For example if you have a history over the last 12-36 months of obtaining and paying off £50k of debt then you are likely to be accepted for this and more in the future. A “Big balance” is relative to the individual, and “hits” to your credit scoring happen by doing something out of the ordinary compared to your three year trend.

  6. The Lloyd’s interest free period on the Avios card has worked really well for me. I don’t have an enormous credit card spend – around £6k over a year – which I would normally clear in full each month (because, duh). That made the £7k spend target for the upgrade voucher tough to hit. I would normally get an interest-free loan from work to pay for my train season ticket, which is my biggest purchase. With the interest free period on the card I was able to use it to pay for my season ticket (£3700) and therefore trigger the upgrade voucher much sooner. I’ve set up a DD to pay it off in monthly instalments so I don’t accidentally spend he extra money coming into my account each month.

  7. There are still a few BT cards out there at 0% interest AND 0% fee. I’ve got two at the moment and another lined up for June when one runs out. It gets disbelieving comments from people who don’t think ‘free money’ can be true but I can vouch for the fact that it is! I’m disciplined though – it’s not a massive amount (under 10k), and I keep it available in savings (i.e. high interest current account) so I could pay it off any time if asked (which I never have been so far). The 0 fee BTs are typically 2 years in duration. Tesco do one at the moment actually, but guessing Rob doesn’t mention it here as it’s non-commissionable for him.

    • Also doesn’t seem to affect churning of points cards.

    • Are the disbelieving comments from the Daily Mail set?

    • It’s not that, I work on the basis that HFP readers are not the balance transfer types. It has been mentioned on Shopper Points.

      You also don’t earn Avios on a balance transfer so it is more MSE territory than mine.

      • Rob – I really want seats on Air France’s new first class product but hear that redemptions are practically non existent.

        Does it have legs to buy tickets on any of our usual loyalty cards and then transfer the balance over to a free balance transfer card; offsetting (aka rationalizing!) the original purchase points against the outstanding balance? And if so which card? (sorry if I haven’t explained that very well).

        • If you would otherwise be paying interest, then the 3% fee to move the debt to a balance transfer card is worth doing – it is a better option than paying 19%-22% interest on a mileage card.

          If the question is: “Does it make more sense to use, say, a BA Amex for a purchase and then pay 3% fee to move the debt to a 0% balance transfer deal elsewhere, compared with using a 0% purchases deal in the first place” the answer is no. There isn’t a card where the rewards are that valuable – except, perhaps, if you were struggling to hit £10,000 for a BAPP Amex 241 voucher.

          If you’re running a credit card balance, however, clearing that should be your main focus rather than juggling other cards for miles and points. In a perfect world the total amount of credit card interest paid by the HFP readership each month would be £0. It will already be close to £0 but we can always improve on that figure.

          • Although if you go with a no-fee 0% option then a bit more worthwhile.

            Totally agree no-one should be paying any interest if you’re on a points earning card though, totally negates the benefits!

          • Thanks Rob.

      • Legacy Lloyds Avios card: 1500 Avios points per £1000 transfer with 3% fee, nil interest for 6-9 months. Continuously available. (1500 points cost £30, coupled with £1000 to play with for 6-9 months.) Or looked at another way: £1000 balance transfer with APR of 4.5% and 1500 points thrown in.

  8. No mention to the Amex Gold Credit Card? 0% for 18 months and an effective 1:1 earn on Avios through Membership Rewards is a good contender in my opinion. However, I’ve only seen it running exclusively on MoneySupermarket.

    • Good point. MoneyFacts – which is in theory comprehensive – doesn’t cover that because it is just with MoneySupermarket, where presumably it is dying a death. I am not allowed to have it.

  9. the real harry1 says:

    Stoozing: rather than ferret around for bank a/cs offering a small % on your savings, if you have an offset mortgage (say) with a 3.69% interest rate then everything you add to your associated offset savings a/c effectively pays you that 3.69% interest.

    • Totally agree – sadly(!) I’m on a 0.5% above base rate tracker 😉 Definitely always want to pay off highest interest debts first though, especially as saving yourself interest on a debt is always tax free, whereas savings interest is only free up to the relevant tax-free limit!

    • 3.69% + tax at the relevant rate for many of us no?

  10. I had a Lloyds Avios Rewards card a couple of years ago and am currently a supplementary on my wife’s. Now that the sign-up bonus is gone, would they honour the double points for 6 months and the interest free period for purchases for previous customers, if I applied now?

  11. Hi – a bit OT, but still on the theme of credit cards: I wanted to convert some Amex MR points to M&S vouchers today, but see that the minimum conversion is now 40,000 which equates to a £200 voucher. In the past I used to convert 5000 MR to £25 of vouchers but noticed that this is no longer available. In fact the minus conversion for other vouchers have also increased e.g. House of Fraser is now 10,000. Amazon and a few others are still a min. of 5000 MR. Has anyone else noticed this, or is it a system error?

    • the real harry1 says:

      Why would you take 0.5p?

      • I was planning on giving some gift cards as birthday gifts. Also we shop a lot at M&S food so they’re quite useful, not so bothered about the 0.5p value here. The rest of the points I will transfer to Avios at some point.

        • Rod – I’d be willing to buy avios off you at 0.5p with payment in M&S vouchers. I even have some lying around from when Tesco were selling them.

          Easiest way? Create another account and then that form part of my HHA?

    • Highly likely Amex has simply sold out and is awaiting new stock.

  12. the real harry1 says:

    Raffles on reflection you have not mentioned http://uk.virginmoney.com/virgin/credit-cards/pre-apply/?product=purchase-card

    27 Month Purchase Credit Card

  13. James Morrison says:

    This Amex offer isn’t mentioned: https://www.americanexpress.com/uk/content/arcc-purchases/

    Would probably work best alongside an existing Amex account that has already had the introductory MR bonus applied.

    • AmEx used to offer this card to existing AmEx Gold Reward members including a sign-up bonus of 4000 MR (though I am 100% sure).

  14. John Tickner says:

    Do Curve or Supercard purchases and cash advances count as purchases ?

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