Is an Interest Free Credit Card Worth Getting?


An interest free credit card can sound like a fantastic idea and it obviously has advantages. With no interest to pay it means that you can effectively borrow money for free. This sounds too good to be true and it probably is in many cases. This is because the interest free period will not last forever and quite often, once the interest starts being charged it is really expensive. This means that the card will only be worth getting in certain circumstances.

Repay in full before interest starts being charged

The first thing to be very aware of is when the first interest payment is charged. This will vary depending on the card that you take out. Usually you will have an interest period of a few months but this might be a s much as a year. Make sure that you note this and if you are unsure then contact the customer services department and note what this date is as it is very important. You want to make sure that you repay the card in full before this date comes about. This is because the interest that you will be charged is likely to be very high. These types of cards tend to have higher interest rates than standard ones. This means that if you do not think that you will be able to afford to make the repayment, then it could be best to just get a cheaper, standard card or to use a different type of borrowing that will save you even more money.

Only use it for normal spending

It is really important not to see the card as a free pot of money that you can use to spend on anything that you want. There may be things that you have been wanting to buy for ages and hoping that you will be able to get at some point. This is not the sort of thing you should be using the card for. You need to keep in mind that you will need to repay it in full. Therefore, you need to only buy things that you would normally buy, such as food, fuel and things like that, then you know that you will have enough money to repay it.

Put the money you would have spent in a savings account

As you buy things with the card take the money form your bank account and put it into a savings account. This will achieve two things. It will ensure that you have enough money put by to pay for the card when you need to repay it all. It will also earn some interest in the savings account. Therefore, when you repay the card, you will have a bit of money left over which will be the interest that you have made on it.

This will not be a fortune, as the interest free period is unlikely to be that long and interest rates are low at the moment. However, it is better than nothing and means that you will benefit financially from having this card.

Some people would move the outstanding card balance to another interest free card and continue with the process so that they can gain even more interest. This can be a good idea, but you may find that the card company charge for transferring in a balance like this. Therefore, you will need to check this carefully. An alternative thing to do is to take out a second card, once you have repaid the first and repeat the process so that you can get even more interest into the savings account. However, taking out multiple credit cards can look bad on your credit record so do be aware of that.

Be cautious

You do need to be really careful that you stick to your plan with regards to the card. There is always the temptation to use the card to buy things that you would not normally be able to afford. There is also the temptation to use the money that you have carefully put into the savings account to buy other things. If you do either of these things then you run the risk of not being able to repay the card in full or maybe not even being able to afford to pay back any of it. Then you will be subject to those expensive interest rates.

So, the card is worth getting if you are confident that you will be able to use it wisely. You need to be able to be capable of repaying it in full before the interest kicks in. Therefore, you need to put money aside so that you can afford to do this. You will know whether you are the sort of person that will be able to do this with ease or whether it is too risky for you to take on this sort of card.

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