Is it Worth Getting an Interest Free Credit Card

There are many types of credit cards out there and it can be tempting to try an interest free one. These sound fantastic because you can borrow money for nothing, but it is worth considering it before going for it.

Firstly these credit cards will not be interest free forever. You will find that they will start off interest free and then move onto a variable rate after a few months or if you a lucky a few years. The variable rate of these cards tends to be extremely expensive and so you could soon end up paying as much interest as you would had you gone for a cheaper, standard credit card. It is worth checking what the rates are and comparing them to other cards so that you can work out whether it is such a good idea after all.

Some people take out the interest free credit card and save up the money that they need to pay it off. They will put the money they need to pay off the card each month in a savings account and then after the free interest period runs out they pay it back. This allows them to gain interest on the money that they have saved and they can make a profit out of the card. This is a great idea as long as you know that you have the self-discipline to save the money and pay it back before the interest starts. When interest rates are low, it is less profitable though as the savings account does not accumulate much money.

This sort of scheme is a risk though and you will have to decide whether it is the right sort of thing for you. You will have to make sure that you do save up the right amount of money, that you are not tempted to spend it even if you really want to and that you pay it back when needed so that you do not get charged any interest. Only you know whether you will be able to achieve this as you know how good you are at saving money and making sure that you do not spend it. You will also know whether you are likely to have enough spare money to be able to save up each month.

Some people transfer a balance from a credit card to an interest free one. This can be really useful as you will move the money away from a card where you are paying interest to one where you are not. There is a problem with this though as most interest free cards will charge for balance transfers and so you will need to calculate whether it is still cost efficient to transfer the money. Also you will need to make sure that you pay off the outstanding balance during the interest free period as the interest will be very high once it ends and could mean that it ends up being more expensive than leaving it where it is.

It is also really important to make sure that you are aware of the terms and conditions of the card and any charges it may have. For example as well as knowing when the interest free period ends and how much the interest will be once it does end, it is important to find out what the charges are for using the card abroad, drawing out cash and things like that. If you want to use the card for these things then you could find that it ends up being more expensive than using a standard card. Therefore it is really important to know exactly what the charges will be before you use it.

So getting an interest free credit card can be really useful and save you a lot of money. However, you do need to make sure that you are careful in how you use it. Make sure that you are aware of all of the charges so that you use the card responsibly. You should also be confident that you will not have outstanding debt when the interest free period ends so that you can take full advantage of not paying interest. If you end up paying interest you will find that it is a lot dearer than with a conventional card and so you need to avoid this.


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