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Credit Cards
> Interest Free Credit Card - UK Guide
In a nutshell
Credit cards with interest free periods and/or interest free balance transfers.
Best Credit Card For
Anybody looking to take advantage of an interest free period for credit card spending.
Credit Amount
Each credit card company will have their own internal rules governing the actual credit limit you'll be given. It's also likely that they will take your earnings and credit history into consideration before giving you a limit. People with good credit ratings can usually have higher limits than those with bad ones. If you apply for a premium card you'll get a higher limit in most cases and, sometimes, no set monthly limit at all. However you'll have to meet qualifying criteria to get a premium card - for example, you may need to earn a minimum salary (i.e. £20,000+) and to have a good credit rating.
Advantages
Any interest free period can be used to your advantage. If you get an interest free balance transfer then you can take some time to pay off your existing credit card borrowings with no interest being added on top. Some credit card companies will also let you transfer over other debts in this scenario as well. If you get an introductory interest free period then you can use your card during this period without having to pay interest if you don't repay the balance in full every month. This can be particularly useful for larger purchases where you want to spread repayment over the introductory period.
What to look out for
Many interest free credit card deals can hide quite high standard APRs - these are the rates you'll move on to once your interest free period is finished. So, although you won't be paying any interest for a while you could find that you'll be paying much higher interest in the long run. Interest free credit cards can also encourage consumers to spend more on their cards than they normally would. So, they get to the end of their interest free period and find that they have built up substantial debts. These may well attract high interest charges which can make it easy to get into financial problems. If the worst comes to the worst and you can't make any monthly repayment at all then your credit card provider may take legal action against you and may lose your property/possessions to repay your debts. You must also be careful to make at least a minimum repayment every month. If you don't you'll be charged penalty fines and your interest will mount up. If this happens regularly then it will have a negative effect on your credit rating which could affect the likelihood of your getting further loans finance in the future. People with a bad credit rating may find it hard to get a no interest deal in the first place. And, even if they are accepted for a deal, they may have to pay inflated interest rates down the line for the privilege.
Alternatives
You may want to compare standard card rates to see how you could save in the long run with cheaper rates. If an interest free period is essential to you then there is no real alternative.
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