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Ask an expert: ‘I have a 0% interest credit card – why am I being charged interest?’

Which? explores the intricacies of 0% interest credit card deals

Every week, Which?’s money experts answer your financial queries. You can submit your questions to money-letters@which.co.uk, or via our Facebook or Twitter pages.

Q. I opened a Sainsbury’s credit card account to take advantage of its 0% interest deal on balance transfers. Each month, I make sure I pay enough to cover any purchases I’ve made and a little bit extra to pay off some of the balance I transferred.

However, each month I was paying 0.048% interest per day. I was told because I still have a balance, I was being charged for any purchases I made. Is this right?

Alan Aziz, Tyne and Wear

A. Yes. Normally, if you spend on your credit card and pay off the balance in full every month, you’ll receive up to 56 days interest-free on new purchases.

But if you’ve just transferred a balance, it’s highly unlikely that you will have cleared the previous month’s bill in full. This means you’ll always be charged interest on purchases straight away, even if you pay them off when your bill arrives.

How credit card interest works

Many credit cards will charge different levels of interest on debt, depending on the transaction you. Even if you’re in the middle of a 0% balance-transfer deal, you could still be charged varying levels of interest on other transactions, such as purchases or cash withdrawals.

Credit card companies must use repayments to pay off the most expensive debt first. But it’s common that you’ll be charged interest from the day of the transaction if you have any form of debt remaining on the card. That’s why you’ve been charged despite covering all your purchases each month.

To avoid paying interest on purchases while paying off a balance transfer, consider using two separate cards – one that offers 0%-on-purchases and one with 0% on balance transfers.

Alternatively, look for a card that offers the same 0% period on both purchases and balance transfers, but bear in mind that this is likely to be shorter than separate deals.

The Which? Money Compare credit card tables let you search hundreds of cards from providers large and small to choose a great deal based on quality of service as well as cost and benefits.

Which? Money Compare table: 0% balance-transfer and purchase cards – our tables are updated daily

How to find the best credit card

Credit cards can help you manage your finances in a number of ways, depending on what type of card you choose.

A 0% balance-transfer credit card gives you temporary breathing space from the interest you’re paying on existing credit card debt. Some cards will allow you many years before you’re charged any interest on a balance transferred from another card. However, most cards with lengthy 0% balance-transfer deals will charge you a percentage of the debt transferred as an initial one-off fee.

A 0% purchases credit card won’t charge interest on any purchases made for an initial period. The lengthiest 0% purchases deals last 32 months. The most important rule to remember is to clear your credit card before the initial 0% deal expires to avoid being charged interest on your remaining balance.

If you’re able to clear your entire balance on a monthly basis, it may be more beneficial to choose a credit card that rewards you for spending. Cashback credit cards will credit a percentage of your spending back onto your card. Other reward cards will reward you with air miles or retail vouchers.

Find out more: how to find the best credit card in three steps – our simple interactive guide


Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

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