Interest Free Credit Cards

What are Interest free credit cards ?

Interest free credit cards represent a kind of Holy Grail for consumers. The idea of being able to borrow unlimited sums of money without paying any interest is an attractive one; so it isn’t surprising that many people are searching for such a product. This confusion is aided and abetted by credit card companies who often advertise their cards as ‘interest free’. This often misleads consumers into believing that interest free credit cards really do exist. In reality they don’t and credit card providers are only allowed to get away with their advertising by ensuring that some elements of the card are interest free for certain periods.

Most credit card companies offer an interest free period at the start of the contract. The interest free offer generally only applies to balance transfers and new purchases (while ‘normal’ spending attracts the ‘normal’ APR). It’s also important to note that most interest free offers only last for a limited period of time. Take Chase for example, who offers zero interest on balance transfers and new purchases for the first six months of the card’s life. Similarly Citibank offers an interest free period on balance transfers for the life of the balance as long as you spend $50 a month on the card.

The best advice is to decide exactly what you want (whether it’s ‘interest free’ balance transfer, ‘interest free’ purchases or both) and then shop around without compromise. While organising your finances remember that: once the ‘interest free’ period is over the standard APR will kick-in and you’ll have to start paying to service your debt.

Despite the cold facts some people still believe that they might be able to hoodwink credit card companies by constantly swapping their balances. They take out a card for six months and build up debt before transferring to another card. The problem with this is that you can do it for a short time, but most card companies will limit how much money you can transfer interest free. Hence in reality you are only putting off repayment to a future date. Lamentably, consumer pilgrims hoping to attain the elusive holy grail of interest-free credit cards will find it doesn’t exist.

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Updated: — 5:30 pm
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