Sometimes it is possible to get a credit card with zero interest. This can be extremely tempting to get and it can be a really good thing for some people. However, there are advantages and disadvantages of using a card like this and it is good to be completely aware of these before you take one on.
Advantages of a zero-interest card
With most credit cards you will get a certain interest free period. This is between the time that you buy something using the card and the date that you have to clear the balance before any interest is charged. This period of time can be anything up to about six weeks. However, normally, if you do not repay the full balance you will then get charged interest and it can be at a pretty high rate. However, with a zero-interest card you will be able to only repay a minimum balance and you will not be charged interest on the remining one. This means that you will be able to buy what ever you wish and not have to repay more than just a small amount.
Many people can use these to their advantage. The money that they will have used to repay the card, they will put in a savings account. This money will gain interest and then when they do have to repay the card (as the interest free period will only last from 6 months to a few years) there will be the money available to repay it and they will have gained the interest on it in the meantime. There is obviously more to gain from this if interest rates are high.
Another way that they can be used is if you need to buy something the you cannot afford such as a new white good or car and you do not want to pay interest on it. If you use the credit card, then you can repay a bit each month, making sure that you repay the full balance before the zero-interest period is up. It can mean that you will be able to spread a cost and this can be extremely useful.
Disadvantages of a zero-interest card
Although the zero-interest card can be extremely useful, there are risks with using the card as well. It is worth finding out, to start with, when the zero interest period ends. Once this ends you will immediately have to start paying interest on any money that you owe. This interest could be dearer than you would pay on a standard credit card and even if it is not, it can still be pretty high as credit card charges usually are compared with some other loans. If you think that there is a risk that you will not be able to repay the full balance on the card before this date, then it is wise to consider whether you should even be taking out the card in the first place.
Some people also find credit very tempting. They see the money as theirs to spend and then do not really think about or plan how they are going to repay it. It is wise to think about whether this is what you are like and whether it is something that you are likely to do. You will need to be really honest with yourself here. You also need to think about whether you will be committed enough to put money aside each month to make sure that you will have enough to repay the card before the interest free period is up. Lastly, you will also need to make sure that you will have enough money available to you in order to do this. Think about how much you get paid and the other things that you have to pay for and whether there would be enough money left to put some aside to repay that credit card.
So, as you can see, although it seems like a really good idea to have a zero-interest card, you do need to be careful. You need to make sure that you can take advantage of it and that you do not get into trouble with it and end up paying out lots in interest. Many people do take out the cards and use them wisely and gain from them, but there are people that struggle with them. You do need to think about responsible you are with money and how tempted you get with overspending. It is hard to sometimes admit to yourself what you are like, but we are all different in our relationship with money and we need to make sure that we are honest and make decisions that will help us to keep on top of things. It is very hard not to be tempted to spend money, so many people struggle with it and this can be as much to do with our control as good marketing by companies trying to sell us things. Do not blame yourself, but just make sure you take care of yourself.