Top Tips For Interest-Free Credit

Banking and Borrowing

28 March 2006 | 0 Comments

If you haven't made use of introductory 0% credit cards, you're missing a trick.

About three years ago I got my first interest-free credit card in order to finance some home improvements. I've been paying it off ever since, transferring the remaining debt to a new 0% card whenever the introductory period expires.I'm on my fourth or fifth card now and the last time I shifted the debt I was lucky enough to catch a rare 0% deal with an introductory period of 18 months, so I haven't had to think about the next deal for quite a while. In the meantime the debt has been steadily shrinking while the savings I could have used to pay for the home improvements have continued to earn interest in my Cash ISA. How cool is that!And that's the first tip: Go for the longest introductory period possible when you're looking at applying for a 0% card. Six months can go rather quickly so the longer the period the better.Check whether the interest-free period applies both to balance transfers and new purchases. If there's no introductory offer for new purchases then don't use the card to buy things. The chances are your new purchases will be subject to a higher interest rate and they'll be the last charges your payments will be applied to. Your payments won't be put towards your new purchases until your original balance transfer has been paid off so you'll be wracking up interest which rather defeats the purpose of getting a 0% card in the first place!Be as paranoid as you like about paying your bill on time every time. If you're late even just once you'll very likely lose the 0% deal on the spot as well as being clobbered for late payment fees.If you plan to move any remaining balance over to a new interest-free credit card once the introductory rate expires, make sure you line up the new card in plenty of time. From start to finish it can take a month or more to get all the paperwork and PINs through.Finally, don't forget to shut the old cards down as you go otherwise your credit report could show you as having 'too much' available credit and that could make lenders shy away from you. Apart from anything else, it should enable you to qualify for introductory offers from card companies you've used in the past because you'll be considered a new customer when you go back to them a year or two later!Find out more about Credit Cards | Cunning Credit Card Conduct

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