Sainsbury’s Bank has upped the ante on its purchase credit card, boosting the 0 per cent interest deal to a market-beating 31 months.
The new deal overtakes the likes of Santander and Tesco Bank – which both recently improved their own offers – Halifax and the AA, all of which now offer interest-free deals lasting 30 months.
These 0 per cent interest cards have come under fire from experts recently over growing fears they could encourage borrowers to take on debt they may not be able to afford to repay in the future.
Home improvements: 0 per cent purchase credit cards are a popular way to spread the cost
While they can be a useful tool for those who use them correctly, the worry is that 0 per cent purchase deals entice consumers to build up hefty balances on their credit cards with no real plan to pay them off.
Credit card companies begin to make a profit once 0 per cent deals end and they can apply interest at eye-watering rates of 18 or 19 per cent.
This quickly inflates any remaining balance, which can land borrowers in hot water.
That said, if you wise up to lender’s tactics you can use these deals to your benefit. If paid off in time borrowers won’t pay any interest.
Interest-free credit cards can therefore be particularly useful if you need to pay for a large purchase such as home improvements or the cost of a holiday upfront and want to then spread the repayments.
>You can skip to our guide to how to use a 0 per cent purchase card here
What is Sainsbury’s Bank offering?
Currently Sainsbury’s Bank offers the longest interest free deal on spending at 31 months.
Customers also get 3 months 0 per cent interest on balance transfers with a 3 per cent handling fee.
The supermarket giant is also using Nectar points to encourage you to spend on the card. It pays from two Nectar points per £1 spent on Sainsbury’s shopping and one Nectar point for every £5 spent elsewhere.
Plus, if you swipe your credit card in stores or on fuel four times in the first four months, you will earn a bonus 5,000 loyalty card points. This is worth £5 as each point is worth 0.05p.
Unlike some credit card providers, Sainsbury’s promises to give you the full 31 month 0 per cent interest deal if you get accepted for the card.
But you may be offered a slightly higher standard interest rate, as many lenders only offer the advertised rate to customers with the best credit scores.
How does it compare?
There are scores of cards offering slightly shorter deals which you may want to consider.
The top deals will receive huge numbers of applications, meaning lenders have the pick of the bunch when it comes to who to accept.
Those with weak credit ratings would therefore be wise to pick a slightly less competitive deal or consider using an eligibility checker to find a card they are likely to qualify for.
Tesco Bank and Santander have also recently upped their 0 per cent purchase credit cards to 30 months in line with the AA and Halifax.
Tesco Bank offers Clubcard rewards for spending on its new deal which could make it a tempting offer for those who shop with the supermarket.
Find out more about how the scheme works here.
Santander’s deal however comes with an extended 0 per cent balance transfer deal on top of its purchase offer, at 30 months.
A word of warning – using the same card to spend as well as for clearing existing debt, can be dangerous as it can make it harder to clear the balance before interest charges kick in.
|Top deals||Purchase offer (months)||Extras||Standard APR|
|Sainsbury’s Bank Nectar Purchase card||31||3 months 0% balance transfers, 3% fee, Nectar points for spending plus 5,000 bonus after £250 spend within 1 month.||18.9%|
|Tesco Bank||30||3 months 0% balance transfers, 2.9% fee.||18.9%|
|Santander Everyday||30||30 months 0% balance transfers ,2.75% fee.||18.9%|
|AA Dual Credit Card||30||16 months 0% balance transfer if made within 3 months, 2.89% fee. £35 cashback when you spend £500 or more within 60 days of account opening.||18.9%|
|Halifax||30||6 months 0% balance transfers made within 90 days, 3% fee.||18.9%|
|Lloyds Bank||29||29 months 0% on balance transfers, 2.5%% fee.||18.9%|
|Lloyds Bank Choice Rewards||29||Collect double Choice points for 6 months. £24 annual fee. 3% handing fee.||23.7%|
|Bank of Scotland||29||29 months 0% interest on balance transfers. 2.5% fee.||18.9%|
|Halifax||29||29 months 0% interest on balance transfers. 2.5% fee.||18.9%|
|Correct as of 11 May 2017|
TRICKS TO AVOID THE 0 PER CENT INTEREST TRAP
The key to success is to make sure you are disciplined about your debt.
If you do this, you can make a 0 per cent interest card can work for you, rather than to the benefit of the credit card company.
That means if you have a 0 per cent interest deal, making sure you have repaid it well before they whip away the 0 per cent promotion.
Whether you have a balance transfer card or a purchase deal, the best way to do this is to sit down and work out how much this means you will need to repay each month.
Then make sure you set up a direct debit from your account for that amount.
This will also make sure you never rack up late or missed payment fees.
The safest way to use these cards is to keep them for the purpose of repaying the debt.
To avoid temptation to run up a bigger bill by spending on the card, it is best to ditch the card from your wallet, or cut it up completely.
If you can’t spend more on the card, you will also avoid any penalties for spending beyond your limit. This usually means a £12 fee and a mark on your credit score.
Editor’s Credit card deals Of the week
Representative example: If you spend £200 at a purchase interest rate of 18.9% p.a. (variable) your representative rate will be 18.9% APR (variable). Credit limits and terms may vary based on your individual circumstances. Balance transfer offers and introductory fees limited to transfer made with 60/90 days of account opening. See product specific T&Cs. * must spend £1k within 3 months