There is sometimes an opportunity to get a 0% credit card. This means that it will be interest free. It can seem like a really great idea to be able to borrow money for free. However, it is well worth making sure that you are fully aware of how it all works and then think about whether it really is the right option for you.
How Does the Card Work?
These credit cards work in a very similar way to any other credit card. They will allow the holder to use them like they would any other credit card. So, they will be able to buy items using the card and not pay for them. When the statement arrives, the card holder will still have to make a minimum payment but they will not be charged any interest on the outstanding balance. It all sounds great, but the 0% period will not last forever. You will only get it for a certain amount of time, perhaps only 6 months but this will vary depending on the card issuer. This means that once that time is up you will need to start paying the interest on it unless you can repay the balance before the interest starts being charged.
How to Take Advantage of it
It can be good to use the card during the interest free period and perhaps even spend it up to the credit limit. You can use it for a large purchase that you need to make or to buy your general shopping with. Then you can put the money that you would otherwise have spent on the items you were buying into a savings account and earn interest on it. Then you can use the money to repay the card once the 0% interest period ends. You will then gain the interest on the money. Of course, you will need to be very self-disciplined with this and make sure that you do put the money into the savings account and do not spend it or else you will be in trouble when it comes to having to repay it and you will have to pay interest on what you owe and this could be very high. Therefore, you need to make sure that you only do this if you know that you will be able to manage the repayments.
What to be Aware of
It could be the case that you will spend more money than normal because you have this interest free card. You might think that you can use it like free money and buy all sorts of things on it and not worry about it. While it is free for a while, it is well worth remembering that you will need to repay it at some point. You hopefully want to repay it before you get charged any interest on it too. It is likely that the interest free period will go very fast and you will You will probably find that the interest on this sort of card will be higher, once you are charged interest than the interest on a regular credit card, so you need to be really careful of this. If you spend a lot on it and take a long time to repay it, it could even end up costing you more than if you had used a regular card. So be really careful about getting one and make sure that you are confident that you will be able to repay it and that you do not use it for buying things that you would otherwise not have purchased.