Interest free and 0% credit cards allow users to borrow for free for a set period of time. They are ideal for new customers who can afford to pay off debt within the allocated time period. Interest free cards are used by lenders to attract new credit card customers. There is two main types of interest free credit cards: 0% purchases cards and 0% balance transfers cards. Individuals can also get a single card which offers both of these functions although getting two separate cards is more common.
When looking for zero percent credit cards it is important to look out for key features that differentiate interest free credit cards. The most important thing to consider is the length of the interest free introductory period. By using a company that allows cardholders to borrow interest free for a longer period of time means that you have longer to pay off the debt without having to pay hefty interest rates. It is essential that minimum payments are made on time otherwise the interest free period may be terminated.
An interest free purchase credit cards enables cardholders to spread large debts into smaller and more affordable payments. As long as you pay the debt on time and meet the minimum payments you will not have to pay any interest on the amount borrowed on an interest free credit card. Taking your credit history into consideration, the card issuer will set a spending limit once you apply for the card.
An interest free balance transfer credit card allows users to transfer existing debt to another card where 0% interest is charged. As with interest free purchase cards the interest free period is only temporary and if debts are not cleared within the specified time frame then interest will be charged on existing debt.
To transfer the balance, card providers will typically charge a fee of around 3% of the total debt to do this. The availability and the exact terms of this service depend on your previous credit history.
The biggest advantage of using an interest free credit card is simply the fact that it allows cardholders to borrow money without paying any interest for a defined period of time as long as the necessary terms are met. This allows cardholders to make purchases that they otherwise would not have the cash flow to make.
In addition, zero percent interest transfer balances allow users to transfer existing debt to new cards where interest will not need to be paid. This has the potential to make debt cheaper, even with a transfer fee included (typically between 3% and 5% of the total debt).
You can expect to receive the same benefits of a typical credit from an interest free credit card. For example, 0% interest credit cards provide extra protection offered to consumers by section 75 of the Consumer Credit Act. This law states that customers who make purchases on their credit cards of up to £30,000 will be refunded by the credit card company if the good is lost, stolen, faulty or goes missing. You simply need to make a claim to the credit card company in order to get a refund and this type of protection is not available when using a debit card.
The biggest downside of interest free credit is that it can become very costly if you do not complete all payments within the allocated time frame. If users do not make all payments by the end of the period then they should expect to pay typical interest rates on remaining debt, which tend to be relatively high. This means that 0% interest credit may not be suitable for those who are not sure whether they will be able to pay off the debt in the time frame.
Similarly, interest free credit cards might not be the best option for those who expect to pay off their debt in full. It may be better for these groups to use a card that rewards spending such as cashback credit cards.
It is also important to note that when using an interest free credit card you must make minimum payments. If minimum payments are not made then the 0% interest introductory period may end and interest will have to be paid on remaining debt. In order to avoid this it is recommended to set up a direct debit for these payments.
Repeatedly transferring balances between different interest free credit cards may seem like a good idea but this practice is very risky. This practice of transferring balances is also known as “tarting” and can damage you credit score because it looks like you are trying to prolong the payment of your debt. So “tarting” may make it more difficult for you to obtain credit in the future. Also moving balances to different cards too often will cause the transferring costs to accumulate.
Finally, 0% interest credit cards may offer you a lower spending limit then you hoped for. A credit card with a low interest rate might offer a higher spending limit and therefore might be a more suitable option depending on your needs.
At Quiddi Compare, we feature a number of top credit cards for interest free and 0% interest credit from the leading providers in the UK. Simply look at our comparison table above and once you have selected the best company for you, click on the ‘visit website’ button which will take you directly to the provider’s website where you can apply. We take a small fee from the card provider to ensure that it is a completely free service for our customers to use and we will not pass on your details to any third parties.
Our extensive database of interest free and 0% credit cards allows us to find the best deal for your personal needs. We recognize that everyone has a different credit history and different needs so we ensure that the service we provide is a personal and transparent one.