Credit card

How to Make the Most of Interest-Free Credit Card Periods

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If you’ve ever owned or considered owning a credit card, you may have encountered periods of interest-free credit. Well, current UK credit conditions mean that a number of major banks are extending their interest-free periods for the foreseeable future.

Here’s how you can take advantage of the situation and make the most of interest-free credit!

What are interest-free periods?

Interest-free periods, or 0% interest periods, are specified periods of time during which banks charge no interest on credit card loans. These interest-free periods usually occur during the first few months of using a credit card or when you pay off your credit card debt in full. Interest-free periods generally end on the date your credit card payments are due.

Most banks offer a specified interest-free period which can range from a few days to several months. Interest-free periods may apply to purchases and balance transfers. However, some credit cards offer one but not the other, so it’s a good idea to check exactly what you can do without interest.

When the interest-free period expires, if you have a balance left on your card, you will start earning interest. You will have to pay this interest over time.

How to make the most of interest-free periods?

Due to the growing demand for credit card loans, major banks are expected to increase their interest-free periods. This means that credit card users will be able to borrow with 0% interest for a longer period. Here’s how to make the most of the interest-free period on a credit card.

Make major purchases with your credit card

Major purchases are items that cost large sums of money. It could be a new TV, a car, or even a kitchen renovation. Due to the high price of these items, it is wise to purchase them during your credit card interest-free period. This way, you can avoid racking up big interest on a single item. Making those purchases early in the interest-free period on a new credit card will also give you more time to pay off the debt before the interest starts accumulating.

Avoid making cash withdrawals

Many credit users get caught withdrawing cash during interest-free periods. Most credit cards only offer 0% interest for card transactions and can charge significant fees for cash withdrawals, and interest for this is usually added immediately. It is wise to check the interest rate for cash withdrawals from your credit card before making cash purchases. Avoiding cash withdrawals is a great way to make the most of 0% fees and prevent unwanted interest charges from piling up on your bill.

Set reminders for due dates

It can be easy to get carried away with spending during your interest-free period and end up shopping at the end of the period. To avoid this error, you should consider setting reminders on your phone that will notify you when your interest-free period is over. Be sure to pay off all your expensive purchases before this time to avoid accumulating unnecessary interest.

Use multiple credit cards

If you have multiple credit cards, each card will have a different interest-free period. You can use this to your advantage by spreading large purchases across cards so your spending is even throughout the month. Plan your spending so that you are always in a 0% interest period. If you plan things correctly, you can spend without interest throughout the month!

Remember that using a credit card is risky even when your expenses are interest-free. Always think carefully before making a purchase and try to get your debt under control by paying your monthly bills on time.

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