The best kind of credit card is one that is absolutely free. Many people don't realize that when you pay an annual fee and/or interest rate for a card, they are essentially paying for the convenience of using it of purchasing items at one point in time and paying for those items later. A free credit card is one that has no interest rate and no annual fee.



Issuers are beginning to offer these free plastics for as a way to entice people to use their cards. As with most things there is usually a catch to a credit card that has a zero percent APR and no annual fee.

While you can commonly find one that does not have an annual fee, cards with zero percent APR, while they are common, are not as easy to obtain. Good credit is a major factor that issuers take into account when deciding the consumers that should receive a zero percent APR on the credit card.

Once you receive a zero percent APR card, it is important to know that the absent interest rate won't last forever. Typically, the zero percent is just an introductory rate that lasts somewhere between six months and one year depending on the terms offered by the issuer.

A few more strings are attached to cards that have a zero percent interest rate. Usually, the zero percent rate will only apply to balance transfers or purchases made, but hardly ever both. What this means is that certain types of balances on your credit card will be subject to the variable interest rate set by the issuer.

Whenever a credit card has different interest rates for different types of balances, the credit card company applies your monthly payments to the balance with the lowest interest rate. Until you have paid off that balance in full, the other part of your balance will continue to accrue interest.

For example, if one offers zero percent APR on balance transfers and you transfer a balance of $500. Later you make $200 in purchases using the it. When you send in a payment each month, it will go toward the $500 balance transfer until it has been paid in full. Meanwhile, the $200 balance will increase each month because interest is being capitalized.

The best way to take advantage of a free credit card is to fully understand the terms you must abide by for the card to be free. Only use it for that purpose and you will receive the full benefit of zero percent APR and no annual fee.