Finding the right interest free credit cards
March 25, 2008
Interest free credit cards have become hugely popular over recent years, with many consumers saving a small fortune on interest charges by using these cards. There are two types of interest free credit cards, and this includes interest free balance transfer credit cards and interest free purchase credit cards.
Unless an offers an equal length of interest free credit on both balance transfers and purchases it is important that you do not use your interest free credit card to make purchases and transfer balances. For example, if you have an interest free credit card that offers 12 months interest free credit on balance transfers and 3 months interest free credit on purchases any balance from your purchases will get trapped behind the transferred balance, and after three months will start to accrue interest, whilst your monthly repayments continue to be allocated to the 0% transferred balance.
It is therefore best to have separate interest free credit cards for purchases and for balance transfers. This will also enable you to find the best deals on each type of credit card, so you can look for the longest interest free period on balance transfer cards and the longest period on 0% purchase cards, so you can make the most of having interest free credit. You will find interest free credit cards available from a range of providers, and, as with all forms of finance, it is important that you take the time to compare different cards from a range of providers in order to find the longest interest free periods and the best deal.
Interest free balance transfer cards
Interest free balance transfer credit cards are designed for those with existing credit card balances on which they are being charged a high rate of interest. The idea behind these cards is that you transfer the balances from your existing credit cards on to your 0% credit card and then enjoy a period of interest free credit, which gives you time to pay off the combined balance without being hit by interest charges. It is important that you try and clear the balance within the interest free period, as otherwise any remaining balance will be charged at the lender’s standard variable rate.
You should bear in mind that you will usually be charged a transfer fee with these balance transfer credit cards, and this is usually a percentage of the amount being transferred in total, with the average charge being 2.5% of the balance. Make sure that you look at what sort of transfer fee the card provider is charging before you commit, so that you know how much it is going to cost you to transfer your balance.
Interest free purchase credit cards
Credit cards that offer interest free credit on purchases are ideal for those that want to use their credit card to make purchases, but want to spread the repayments. By using an interest free purchase credit card you can enjoy a specified period of interest free credit, and providing you pay off your balance within the set period you will not be charged any interest at all on your balance. However, the 0% offer does not apply to cash transactions and withdrawals, only to purchases that are made on the card.
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