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.
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.
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.
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.
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.
Want to earn more points from credit cards? – November 2020 update
If you are looking to apply for a new credit or charge card, here are my November 2020 recommendations based on the current sign-up bonus.
British Airways American Express
5,000 Avios for signing up, no annual and a companion voucher for spending £20,000 Read our full review
British Airways American Express Premium Plus
25,000 Avios and the UK’s most valuable credit card perk – the 2-4-1 companion voucher Read our full review
American Express Preferred Rewards Gold
Your best beginner’s card – 20,000 points, FREE for a year & two airport lounge passes Read our full review
The Platinum Card from American Express
30,000 points and an unbeatable set of travel benefits – for a fee Read our full review
Virgin Atlantic Reward+ Mastercard
15,000 points bonus and the most generous non-Amex for day to day spending Read our full review
Earning miles and points from small business cards
If you are a sole trader or run a small company, you may also want to check out these:
American Express Business Gold
20,000 points sign-up bonus and free for a year Read our full review
American Express Business Platinum
40,000 points sign-up bonus and a long list of travel benefits Read our full review
British Airways Accelerating Business American Express
Earn both Avios and BA On Business points with your business spending Read our full review
Capital On Tap Business Rewards Visa
The most generous Avios Visa or Mastercard for a limited company Read our full review
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.