0% Interest Credit Cards

It’s hard to turn on the TV, pick up a magazine or listen to the radio without being bombarded for advertisements for credit cards, and the marvellous introductory offers they use to pull you in. However, how do you know exactly what these offers really mean, and if they’re right for you? Is it a big marketing ploy that is likely to cost you a great deal of money in the future, or a safe bet that could let you keep a little bit extra in your pocket every month?

One of the most common introductory offers in a credit card is the fabled ‘0% interest on…’, which sounds too good to be true. Generally speaking, it is. How can the credit card company be making money if they aren’t charging you interest on your balance? The answer is simple: they can’t. It’s for that reason that you can expect any 0% interest rate offer on a credit card to be extremely short-lived – usually six months, and almost certainly no more than a year. After that, you’ll generally find that the interest rate is substantially higher than the average, which could well (and probably will) end up costing you more in the long run.

So, are 0% interest credit cards a con that should be avoided at all costs? No… or at least, they don’t have to be. There are ways of exploiting the conditions in order to help you out, but it generally requires a strong sense of willpower and a desire to keep yourself afloat. Picture the scene: you have a little bit of debt on another credit card that’s killing you on the interest every month, but it’s not so unmanageable that you couldn’t pay it off in, say, six months or so. By switching to a 0% interest rate card for those six months (especially if you have 0% on balance transfers as well), you have six months’ worth of interest payments to put towards reducing your debt, thus lowering the amount of interest you’ll pay total. By the time the card’s introductory offer runs out, you could be back to the starting line as far as your creditors are concerned – and now’s a good time to change your spending habits. If you end up with a higher interest rate than usual, either don’t use your card, or ensure that you only make purchases you can pay off as soon as the bill comes, preventing you from accruing extra interest payments.

0% interest rate credit cards sound good, and there’s a good reason for that – they’re a type of advertising, designed to pull you in and (generally speaking) tie you to a higher rate of interest in the long run. However, they can be a useful tool if you’re smart enough and don’t feel the need to be overly extravagant, and can even be used to help you get out of debt. Check the terms before you sign up, and remember not to spend more than you can comfortably afford, and you should be fine.