Monday, 30 November 2009

Interest Free Credit Cards - Top 6 Tips

An interest free credit card can be a sensible way to consolidate debts or make a purchase without paying high monthly interest. But it will only work for you if you remember when the offer ends and repay the balance before then. Here are the top 6 tips on using an interest free credit card.

1. Compare a range of cards across different providers

You may feel it is easier to stay with your current lender but it is important to research all different types of interest free credit card - they will have different terms and conditions depending where you go, and depending on your current credit rating.

2. Look into the main different types of credit card to decide which is right for you

There are two main types of interest free credit cards. 0% on purchases credit cards are best for people without any current debt and usually need to be paid off in full before the promotion period ends. 0% balance transfer cards work better for people who wish to stop paying interest on debts they already owe. These work well for people who have debt but can pay it off within the time period specified - usually 6-12 months.

3. Don't make purchases on a 0% balance transfer card

If you choose to go with the 0% balance transfer option, remember, this will usually mean that any purchases made on that card will incur a high interest rate. It's important to focus on paying off the debt and to be careful not to use this card to make purchases.

4. Pay off the balance before the promotional period ends

Interest free credit providers make their money from people who forget to pay off their debts on the card before the offer ends. In most cases, these types of card will incur very high interest payments later on to recoup any loss made from the interest free period - make sure you remember to pay it off before then!

5. If you won't be able to pay off the debt in time, don't choose an interest free credit card

If you may take a longer time to pay off your debt, or are concerned you might forget to pay off the balance in time, a lifetime balance credit card may suit your needs better. They allow you to pay off a larger debt over a longer period of time. While you sill pay interest, it will be a lot less than leaving the debt with the interest-free card for a long period after the interest free promotion period has ended.

6. Remember to read the small print before signing

Never sign an agreement unless you know you can keep up the monthly repayments and are absolutely happy with the terms and conditions. Otherwise you could be met with unpleasant surprises later on, such as extremely high interest on repayments further into the future.


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