Credit Card Guides

How purchase credit cards work

Purchase cards are a great option for any major expenditure you might have coming up, or also if you want to spread the costs of a lot of smaller purchases over a period. They involve low interest or interest-free periods (lasting in some cases up to 2 years), which allow you to pay off the debt without having to pay much interest as long as the amount is cleared before the period ends.

How it works

This can be a very cheap way to get credit for a large purchase like a kitchen renovation, car or expensive electronics. The amount debited to a 0% purchase credit card will not accrue interest at all in the interest-free period, so it’s like an interest-free short-term loan (allowing you to borrow money for no extra cost).

Payment protection

This makes purchase cards possibly the best method for financing large expenditures, especially with the payment protection offered by credit cards.

Under Section 75 of the Consumer Credit Act, if any purchase between £100 and up to a maximum of £60,260 is made in whole or in part with a credit card and the goods or services turned out to be unsatisfactory, undelivered, or not as advertised, the payment is protected by your card provider. This protection applies even if the seller has gone out of business or has ceased responding to enquiries.

But again, the amount needs to be paid back within the interest-free period or it could start to become a costly way to borrow.

A great way to pay

Aside from the payment protection offered, there are other benefits to making large purchases with one of these cards. Like other credit cards, you can set up a monthly payment, making it very simple to manage the debt.

Other cards called cashback credit cards offer even more benefits if the also offer 0% on purchases. They function similarly to a purchase credit card with a 0% rate on purchases., but you can also claim rewards and more commonly get cashback on some purchases (terms apply). For instance, the Santander 123 card gives a 23 month interest free period on purchases, and you get 1-3% back on purchases made, depending on where the purchase was made.

What are the drawbacks?

Given the amount of benefits of these cards, there are usually quite strict requirements in terms of credit score needed for successful application. However, there are some credit builder cards with lower application requirements that also have 0% purchase periods, which can be an option if you’re interested in a purchase card but cannot get approved for some of the standard cards.

And of course, credit cards can be hard to manage, so you should also consider a standard loan which may not be as financially appealing but might be more straightforward in terms of repayments.

These options are particularly relevant given the standard rate of interest after the interest-free period ends. They can be quite high, so with a loan at least you have a better idea of what the interest rate will be fixed at for the duration of the repayment period.


Purchase cards are a great option if you have the credit score, know you can make the repayments and have some expenditure coming up. There are other options like credit builder purchase cards, that can also be an alternative. Better still in some cases is a card that allows cashback on purchases as well as an interest free period.

Make sure you can make the repayments and they offer a lot of benefits.