Is a 0 per cent interest credit card right for you?

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When you’re looking around for the best credit card deals there are a huge range of options to choose from, but ultimately you’ll want to find a deal that is most suitable to your needs. Perhaps understandably, credit cards with 0 per cent interest periods are a popular choice. If these sound interesting then it’s worth finding out exactly how they work and how you might use them to your advantage during the interest-free period.

Are these cards as self-explanatory as they sound?

Quite simply a 0 per cent interest credit card offers users just that for a pre-defined period of between one month and 18 months. The benefit for lenders is they are a great way to persuade people to apply for a credit card and cash savvy individuals might find they are able to reap the benefits. So, if you’re offered 12 months interest free then you won’t pay any additional fees for a year – even if you only meet the minimum monthly repayments. It’s always worth keeping in mind the terms and condition of the deal you have been offered to avoid paying out, as late payments can lead to some hefty interest rates. Many people also find 0 per cent interest is a useful way of paying down their existing debt. This is called a balance transfer and although an initial fee is usually attached it can prove to be a great way to get finances back on track.

How to make them work for you

If you have a good credit rating, are prepared to be organised and want to make a little extra money then stoozing might be an option worth considering. This practice sees people only making the minimum repayments on their 0 per cent credit and placing the money they would usually use to buy things in to a saving account offering a preferential rate of interest. Over time your savings should grow and so long as you pay off your full balance before the end of the interest-free period you should find you’ve made a little money. Be sure to be disciplined though and set up a direct-debit for each monthly payment.

Alternatively, if you do have an existing credit card balance that you’d rather not have to pay additional charges on, then it might be worth giving yourself a little breathing space with a balance transfer card. This allows you to clear your debt over time and providing you’re not using the card to make additional purchases can prove extremely beneficial.

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Photo by Håkan Dahlström