0% purchase credit cards – it’s not all about the length of the promotional term

Personal Finance Expert, Andrew Hagger, has just released new credit card research showing how the 0% purchase sector of the credit card market has evolved over the last two years.

Andrew Hagger of Moneycomms comments:

With the credit card balance transfer market the balance transfer fee is frequently the element of a card that helps pinpoint the best deal.

However with the 0% purchase cards there is no corresponding one off fee so consumers need to consider other card attributes when selecting their plastic of choice.

This includes looking at the reward scheme/cashback, maximum interest free days and the ‘revert to’ or ‘go to’ interest rate that kicks in once the 0% promo offer expires.

The battle for best buy status remains fierce because most aggregators compile their tables based upon the longest term.

This has been the key driver that has pushed interest free deals to record levels – up by 50 per cent, from 20 to 30 months in just two years.

The supermarket banking brands Tesco Bank and Sainsbury’s Bank have long been key players in this market with a compelling combination package of long interest free term and rewards, as an example the latter is currently offering a 5000 Nectar point intro deal worth £25 for new customers.

The average promotional term for a 0% purchase credit card is now 11.9 months (was 9.3 months in Nov 14) and there are now 18 cards offering 20 months or more compared with just a solitary deal in November 2014.

If it’s a card that’s going to be a long term shopping companion consumers should also factor in whether they’ll get any kick back for their loyalty and what the interest rate will be when the promotional deal ends.

Many rewards providers have cut the reward earn rates or ditched their schemes altogether due to cost pressures from the EU interchange fee changes.

In this latest 0% credit card purchase market analysis carried out by Moneycomms only John Lewis (Partnership Card), Nationwide Building Society and Sainsbury’s Bank have maintained their reward rates of 2 years ago .

I’m sure this market will continue to develop and a 36 month 0% purchase card may well be a possibility before too long, however as with the balance transfer market I urge consumers not to base their choice purely on the longest deal as it’s not necessarily the most suitable or financially beneficial.

 

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