Borrow for free with this fantastic plastic
Right now, pounding the plastic with expensive purchases is something we should all think twice about.
According to recent research by Moneyfacts, the cost of borrowing on a credit card has increased, with the average credit card purchases rate now at 18.1% APR - up from 16.3% two years ago.
Therefore, if you must borrow in the near future, it's crucial you do so as cheaply as possible.
A better way to borrow
If you know you need to borrow to cover a major expense, a credit card with 0% purchasing power could help ease the strain on your wallet.
With a whopping 0% purchases period of 12 months, the Tesco Clubcard Credit Card currently offers the longest interest free deal on the market.
Clever cards like this one from Tesco completely eliminate interest charges on new purchases for a set period of time.
This breathing space could allow you to spread the cost of an expensive outlay over a length of time to suit you, without paying extra for the privilege.
Every little helps
If, like me, you're an avid Tesco shopper and conscientiously collect your Clubcard points every time you do your weekly shop, you'll love this card all the more.
When you use your ordinary debit or credit card, you receive one Clubcard point for every £1 spent in store. However, by using your Tesco Clubcard Credit Card, you'll bag yourself five Clubcard points for every £4 spent at Tesco - plus one point for every £4 spent elsewhere!
It is worth noting, however, that you won't be able to get additional Clubcard points on top of the ones you earn through swiping your shiny new plastic at the Tesco till.
Plan your purchases
Unfortunately, like most good things, credit cards' 0% purchases periods inevitably come to an end.
If you fail to repay your balance in full before the Tesco Clubcard Credit Card's offer expires, your purchases will start attracting interest at the credit card's standard rate of 16.9% APR.
Therefore, it's important that you plan your spending and repayments carefully to ensure your 'free' debt does not quickly become an expensive burden.
It's a good idea to set up a monthly direct debit for regular repayments that will clear your balance within the offer period. This will also prevent you from making late payments and incurring nasty penalty fees - which, if you were unlucky, could also lead to the withdrawal of your 0% deal.
Special offers
In addition to the 12 month 0% purchases offer, the Tesco Clubcard Credit Card also comes with a 0% balance transfer period of six months.
However, if you're looking for a credit card to both spend on and transfer debts to, a deal which offers identical 0% purchases and 0% balance transfer periods might be a more straightforward choice. This is because you won't have to stress about figuring out what order your debts are repaid in, or worry you'll be caught out by negative payment hierarchy.
For example, the Halifax and Bank of Scotland All In One Credit Cards currently offers customers equal 0% purchases and balance transfer periods of nine months.
The Tesco Clubcard Credit Card also offers a buy now pay later scheme which allows borrowers to make purchases from Tesco Direct, interest free for six months.
However, you must watch out if you choose to use this facility; after the six month deal is up you will be charged interest on your debt at Tesco's standard APR of 16.9%.
Other options
If you're looking to spread the cost of a purchase and know you can use the Tesco Clubcard Credit Card as outlined above, I think it's currently the best credit card in its class.
However, if you're unable to get the Tesco Clubcard Credit Card deal (perhaps because you already have a Tesco credit card), don't fret. At a respectable 10 months, the 0% purchases deals offered by the BT Retail Card and the M&S Money MasterCard come in a close second.
If you know you won't be able to clear a new purchases debt within the duration of any interest free offer, you could consider opting for a long term low rate credit card instead.
Alternatively, if you suspect you won't have the discipline to pay off a credit card properly, you could consider a personal loan which will tie you into a stricter repayment plan.
Finally, if what you really need is a balance transfer card, the longest 0% deal currently on the market lasts for 16 months and comes with the Virgin Credit Card. This beats Tesco's offering by a massive 10 months, so could well be worth considering.
However, it's vital to remember that no one is ever guaranteed to get the credit card they apply for - especially since the credit crunch.
Therefore, it's always a good idea to check your credit rating before applying to for any form of credit, particularly if you're after a market leading deal.
**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**
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