Golden Rules for Credit Cards With No Interest on Purchases
If you are considering applying for a credit card that charges no interest on purchases, it is imperative that you familiarise yourself with the fundamental guidelines that will allow you to make the most of the offer.
1. Borrow no more than is absolutely necessary.
When using a credit card that does not charge you interest on purchases you make, it is essential to only borrow the amount that you require and are able to pay back.
Therefore, even if you obtain a credit card with a high limit, such as £10,000, there is no point in spending that much money on the card if you do not know how you will pay off the balance once the interest-free period expires.
2. You are required to make at least the monthly minimum payment.
Even if you intend to put off paying back the majority of the money you borrow using a credit card that charges you no interest on purchases, you are still required to make at least the minimum payment on time each month.
If you don’t, you’ll not only be subject to a late payment fee, which is typically somewhere around 12 pounds, but you also risk losing the 0% APR offer entirely. Set up a direct debit to cover this amount so you won’t be surprised by any unexpected expenses.
Check the terms and conditions of your credit card to ensure you are aware of any minimum payment requirements, which are typically somewhere around 1% of the total balance but may be higher in some cases.
If you are able to make a payment that is greater than the required minimum, you should do so.
3. Formulate a strategy for paying back the debt.
The most important thing to remember if you want to get the most out of a credit card that offers 0% interest on purchases is to pay off the balance completely before the end of the introductory interest-free period.
Simply divide the total amount you’ve spent on your credit card by the number of months that your 0% APR offer is valid for, and then set up a direct debit to pay off that amount each month, in the same manner that you would pay off a loan. This is a straightforward method for accomplishing this goal.
This will ensure that you do not have to pay any interest on the money that you have borrowed as long as you do not make any additional purchases.
If you still owe some money on your card after the end of the promotional period, you might want to look into transferring that balance to a card that allows you to do so with no additional interest charge.
4. Do not make cash withdrawals using your card.
Never use a credit card that offers a percentage-free purchase option for cash withdrawals.
If you do, you will be subject to interest charges beginning on the day you withdraw the money, and these charges will typically be at a much higher rate.
This is due to the fact that your 0% APR promotion is only valid for new purchases that you make with the card in physical stores, online, or at restaurants. It does not apply to withdrawing cash from an ATM or any other form of cash advance, such as buying travel money.
When you withdraw cash from an account, some service providers will report this activity to your credit record because it indicates that you may be having financial difficulties.