The pressure to attract new customers has led to many companies offering attractive interest free credit card deals. Even since the recession this trend has continued to grow. Some may offer incredible sounding deals such as an interest free credit card for 24 months for a limited time to attract new applicants.
This will mean that any purchases you make will not attract interest until your introductory rate expires.
For the savvy customer, therefore, there are lots of benefits to be had. If you pick a 12 months interest free credit card, for example, you will have an extended period to settle your debts without incurring any interest.
Will you qualify for an interest free credit card?
Of course, when something seems like too great a deal, it normally is, and interest free credit cards are no different.
First you will have to make sure you qualify, finding an interest free credit card with bad credit can be particularly difficult. By definition these cards tend to be used to attract "prime customers" - those with good incomes and credit ratings. That said, shopping around can work wonders, so you should always have a go. Using our advanced search option will enable you to filter cards by interest free and low credit.
The card might also have restrictions based on regular income. So, while an interest free credit card for 18 months might look too good to turn down, the small print might require a high monthly income, of at least £1,000 which can be proved, before they will consider your application.
It is worth checking these details in the small print as you do not want to waste time applying for cards you are not suited for.
Every application leaves a footprint on your credit record and a lot of applications in a short period of time can make you appear desperate for credit and less appealing to potential lenders.
How do interest free credit cards make money?
This is a very important point as it has a number of implications that may affect the kind of deal you might get. While you might think it is worth looking for the longest interest free credit card possible, this might not work out for the best.
The idea that interest free credit card deals should be so common might strike you as surprising. With so many deals lasting for so long, how on Earth do they make any money? However, credit card companies are no fools and even though they make no money through interest on these deals, they find ways to make their money back.
If you do not pay off the full balance before the interest free period ends, you will then start to pay interest - often at an uncompetitive rate - until you pay it off.
These cards also apply charges you miss the minimum payments. First of all you will be slapped with a punitive fee, and you could also find your zero percent deal revoked, meaning you will end up facing hefty interest charges as well.
The credit company will claim you are clearly not as squeaky clean as you claimed to be and will put you back on the full rate.
So, as in all walks of life, when it comes to zero percent credit cards, the house always wins. That said, if you manage your card and payments efficiently, there is no reason why you cannot get a deal which works very well for you.
For more information on 0% interest free credit cards, use our handy comparison tables.