11:28 20 July 2013
If you've got a large purchase coming up, whether it's a new car, a trip of a lifetime or home improvements, you might be contemplating dipping into your savings to pay for it.
But, with the credit card market getting hotter by the day, borrowing on an interest-free purchase credit card offers a competitive alternative.
Right now, the longest 0% deal on new purchases comes from Halifax at 17 months. Here, we take a closer look at the card.
What's the deal?
The Halifax Purchase credit card offers a market-leading 17 months' interest-free on new purchases. This means you can spend on your credit card and pay no interest at all on that debt for nearly a year and a half.
The card sits comfortably at the top of the best-buy tables, although Tesco's Clubcard credit card for purchases is not far behind, offering 16 months' interest-free, while the M&S credit card offers 15 months at 0%.
The Halifax Purchase credit card also offers six months at 0% on balance transfers - which comes with a 3% fee.
Who's it good for?
Halifax's offering is ideal for anyone looking to spread the cost of one expensive purchase, or even a series of smaller ones, over a number of months, without having to pay interest.
It's a good option for those who can't afford to clear their credit card balance in one go because they have insufficient savings or would prefer not to dip into them.
The main catch with the Halifax Purchase credit card is that the 17 months at 0% will only be offered to you if you have a top-notch credit rating. If your credit rating is a little tarnished, you may be offered a reduced interest-free window of 12 or nine months, with a higher representative APR of 21.9% or 25.9% (variable) respectively.
However, this isn't unusual as lenders only have to offer the advertised representative APR to 51% of successful applicants. It's therefore well worth checking your credit rating before you apply for the card which you can do through our credit monitoring channel. Don't panic if your credit score isn't as good as it could be, because there are ways to improve it - take a look at these top tips.
As with all credit cards of this type, you must also clear your balance in full before the 0% window ends. If you don't, you'll be hit with a representative annual percentage rate (APR) of 16.9% (variable).
What's the verdict?
If you're looking to do some serious spending in the coming months, the Halifax Purchase credit card could be the perfect addition to your wallet. Its market-leading 17 months 0% window should give most people plenty of time to pay off their debt in full.
However, if you're planning to spend over an unlimited timeframe, you might prefer to apply for a card that offers a low rate of interest instead.
For example, the Sainsbury's Nectar Low Rate Credit Card offers Nectar card holders a representative APR of 7.8% (variable) on both purchases and balance transfers. Plus you will also collect Nectar points whenever you shop.
The Sainsbury's Cashback Low Rate Credit Card has the same representative APR of 7.8% on balance transfers and purchases, but instead of earning Nectar points, you'll earn cashback. You'll earn 5.00% cashback on Sainsbury's shopping in the first three months, as well as an ongoing rate of £5 cashback every month you spend £500 or more on shopping, £250 of which must be at Sainsbury's.
You can read more about these cards in my article.
Alternatively, the Barclaycard Platinum Simplicity card offers a representative APR of 7.9% (variable) on both purchases and balance transfers.
Spending on a credit card is not only advantageous in that you'll avoid paying interest for a number of months, but you'll also have additional purchase protection through the Consumer Credit Act.
This means that if you spend between £100 and £30,000 on your card, the lender and the supplier are jointly liable should the goods or services be damaged, faulty or fail to even turn up. This applies even if you only put a deposit on the card.
What's more, cardholders now have additional protection from the Consumer Credit Directive (CCD). It came into effect in 2011 and increases the protection to cover purchases between £30,000 and £60,260.
However, taking a credit card that offers 0% on purchases should only be an option if it's part of a wider plan and you are sure you will be able to clear the balance within the allocated time.
You can apply for the card direct through the Halifax website or through MoneySupermarket until 31 May.
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