Two UK supermarket giants, Tesco and Sainsbury's, are presently offering their customers an astonishing new deal on credit card shopping.
Unbelievably, you can pay for all your purchases by credit card and - wait for it - pay 0% interest for a whole year.
Yes, 0%! Too good to be true? We kid you not; this is a genuine bargain deal too good by far to turn up.
Let us tell you how to avoid getting your fingers burnt by the interest bogeyman and how to make the most of this exciting offer.
What is the deal?
Tesco will give you 13 months totally interest-free shopping using their Clubcard credit card for all Tesco purchases and what's more, they will also give you exactly the same interest free rate deal on non-Tesco purchases, but in that case the interest-free holiday is for three months only.
Sainsbury's will similarly offer you 12 months of interest-free shopping with their new credit card on all Sainsbury's purchases and, as with Tesco, the same interest-free rate on non-Sainsbury's shopping for three months.
The Good News
The primary advantage of this deal is that shoppers are able to pay off their credit card bill over some months without having any interest tagged on.
This is a huge plus and is most appealing should you want to buy a large expensive household item that might be too costly to pay off in one shot. Now you can afford to splash out a bit without the dreaded interest hoodoo lurking in the wings.
On-line purchases through Tesco Direct and Sainsbury's online facility are included in the interest-free deals.
This can make your life a whole lot simpler, as it is possible to buy expensive merchandise from them such as fridges, washers, electric heaters and so on.
The Tesco card charges no interest at all on balance transfers for the first 13 months and Sainsbury's likewise, but for just a year, and neither card charges an annual fee.
Another very useful advantage with both cards is that you can score bonus points. The more you spend, the more bonus points you get. As the saying goes - 'what a bonus'!
Tesco awards you 5 Clubcard points for every ?4 you spend with them and 1 Clubcard point for every ?4 spent somewhere else. Sainsbury's, on the other hand, gives you 4 Nectar points, as they call it, for every ?1 spent at Sainsbury's and 1 Nectar point for every ?5 spent elsewhere.
The Not-so-good News
If you stick rigidly to their rules, these credit card deals can be most helpful in keeping your budget afloat. But be warned that if you neglect to settle up your credit card bill within the interest-free time stipulated, the penalties are high.
The Tesco card APR is 15.9% and the Sainsbury's card 16.9%.
Pretty high, although it could be worse, and it reverses any benefit gained from the 0% interest offer.
So remember:
A good way to avoid making a costly error like this is to clearly mark the end of your interest-free period on your calendar or in your diary or on your fridge door. Alternatively, pre-set your mobile or your Blackberry to alert you in good time.
Be quite clear in your own mind what constitutes interest-free and what doesn't. Withdrawing cash from the machine is definitely not interest free. It is expensive and is to be totally avoided. Tesco charges an agonising 24.942% APR on cash withdrawal transactions and Sainsbury's charge 19.95%! Painful, to say the least!
Be very aware of the term 'Allocation of Payments'. This means that you will have to pay the highest interest transactions off last, so until you clear your card completely any cash transactions may be hanging in there attracting interest until the very end. And you thought root canal treatment was painful.
Another important point to keep in mind is that any non-Tesco or non-Sainsbury's shopping that you do will cost you an arm and a leg if not paid off within the three-month interest-free holiday period. When the three months is up, it is the Allocation of Payments story again. When that kicks in you will accrue interest and any repayments you make will either come off the Tesco/Sainsbury's purchases or balance transfers first.
In short then, know exactly when your interest-free periods finish up and ensure that you have cleared the balance before then to avoid a lightning bolt shock to the system - and the wallet.
Are these interest-free credit cards the thing for you?
Yes, most certainly, if (a) you are a regular customer of either Tesco or Sainsbury's OR (b) you would like to buy something expensive and know you will be able to pay it off fully within the interest-free period, OR (c) cash advances are not for you.
No, not advisable if (a) you are only a casual shopper at Tesco or Sainsbury's, OR (b) if you are the absent-minded type who might forget when the interest-free period is due to expire, OR (c) if you like to take cash out with your credit card, OR (d) if you are unsure whether you will be able to settle the balance on the card before the interest-free period ends, OR (e) if you are going to use the card to pay for your shopping simply to avoid spending the cash in your pocket.
What does the jury say?
"There is really nothing to fear with using interest-free credit cards, such as those offered by Tesco and Sainsbury's supermarkets, as long as you fully understand the terms and conditions under which they issue them," says Lyndsey Burton, director of personal finance comparison site , which lets you as well as , insurance, current accounts and savings accounts.
"There is no off-putting small print but you do need to clearly understand what you are letting yourself in for and what you need to do to get the best out of these very attractive and money-saving offers. They are really a fantastic way to save money and keep your budget in trim, and can only be an asset provided that you take care not to allow yourself to fall foul of the interest trap."
She advises a little care and a reliable reminder system will prevent that and enable you take full advantage of a great offer.
BUT - you do need to be very sure that you know what is involved right up front and as we have warned you before, don't ignore the interest deadlines.
Happy shopping!
