Credit card companies are known for the sign-up deals they offer consumers. While these deals can be enticing, make sure you read the fine print. If you get an offer for a credit card with no-interest, this could be a beneficial option in some situations.
How Credit Cards Make Money
Credit card companies make money off the high interest rates they charge consumers who carry credit card balances month after month. If you don’t carry a balance, you won’t pay the credit card company high finances charges. When you pay less than your full balance on a credit card, the balance held over will be subject to the interest rate outlined in your credit card terms.
Credit Card Terms
Common credit card terms will include the finance charge for a balance held on your credit card account. The credit card company may also charge you an annual fee as well as fees for balance transfers, cash advances, expedited payments, foreign transactions, going over your limit and making a late payment. Sometimes credit card companies will waive some of these fees for an introductory period as a way of motivating consumers to open credit card accounts.
No Interest for 24 Months
A common introductory offer for credit cards is no interest for 24 months or another specified period of time. This may be an offer for new customers, or it could be used to entice customers to use their credit cards more. If you get an offer like this, always read all the terms carefully so you know when the no interest period will end. You will still need to make at least minimum payments on your balance during the no-interest period. When it ends, your credit card agreement will change to have finance charges set at a specific percentage rate on your balance.
Times to Consider Using a No-Interest Credit Card
A no-interest credit card can be a beneficial financial tool to use for a short time. If allowable, you could transfer other credit card balances to the no-interest card during the introductory period. Pay attention to any balance transfer fees that might make this option expensive though. You could also use the no-interest credit card to make a large purchase, giving you time to make payments on it without interest charges.
Moving Forward With a No-Interest Credit Card
If you set up a no-interest credit card, pay close attention to the period of time you won’t have to pay interest so you can manage the balance before the finance charges begin. Before this happens, either plan to have the balance paid off or look for another credit card you can use for transferring the balance.
