How Long Does The Interest Free Period Last?



Most credit card companies offer the low balance transfer rate for a fixed period. There are two ways in which this happens. One way is to have an expiry date of a particular month and year. The second is to specify that the introductory offer lasts for a certain period from the issue of the card. This can be as short a period as three months or as long as 12 months.

Some introductory credit card offers also give a 0% rate on purchases. This means that for a fixed period (usually about six months) credit card users can spend as usual but pay no interest.

What's The Catch?

Credit card companies hope that purchasers will keep the money on the card after the preferential rate has expired. However there's no rule that says that credit card users have to do this. To avoid paying any interest, credit card users can switch their balance to another card. This is known as credit card jumping or rate surfing. The advantage of rate surfing is that credit card users will reduce their debt because the payments they make will not simply be paying off interest.

Credit card companies have caught on to credit card jumpers. Many of them now impose a balance transfer fee of around 2%.This makes rate surfing less attractive. There are still cards that do not charge this fee, though, so it's worth shopping around.

How Else Can I Get An Interest Free Credit Card?

The other way of getting an interest free credit card will work well for people who are organised about managing their money. Those who always clear their balances in full will be able to put their monthly spending on a credit card and clear it at the end of each month without ever paying any interest.

Even people who don't clear their balances in full will be able to take advantage of the interest free periods offered by each credit card. These can be as much as 58 days. All credit card users need to do is make a note of when the interest on the balance is due and pay off the outstanding amount before that.

Paying The Price Of An Interest Free Credit Card

It's best to make the payment a week in advance to give the payment enough time to clear. Otherwise there could be a nasty surprise in the form of an interest payment. Credit card companies also have different approaches to how they apply the payments people make. If your credit card company applies payment to new debt first, then older spending could incur an interest charge.