Interest Free Credit Cards: A Guide To Use Them

The money that is given by a customer as interest charges on credit card is the main

source of profit for any financial institution issuing the credit cards. A credit card allows you to make purchases, pay off any bills even if you fall short of money in your current account.

Getting loan from bank is made simple and easy by a credit card. After the card is issued, the bank charges interest rate on the money given on lend by the bank. This interest gets added up; still the customer pays off the entire debt. The charge taken by the bank is actually an interest percent on the money that is being borrowed on the credit card. This is the bank's source of income.

But, few banks offer credit cards which are interest free. So, the question is what is the bank's source of income from these cards? Are there any hidden charges on these cards that consumers are not aware of? Well, that is of course not the case. The interest free credit cards do not come with any hidden charges. You need to understand how these cards work for the bank and also how you should use these cards to derive the benefits from these cards.

A zero interest credit card charges no interest only for a limited period. This period varies from one financial institution to another and from one credit card plan to another. When the so-called grace period ends, the card would then function like any of the usual cards and will subject its user with an interest that is in accordance to its plan.

Why do banks offer interest free credit cards to their customers? The purpose is to attract more customers to switch to this bank. A consumer who has expensive credit card dues will also obtain a higher rate of charge because of the interest. To prevent the debt from building up, the customer would want to move the debt to other cards so that the charge won't be as high. Moving the money to a card that offers no interest for the first few weeks or months will give him more time to pay for the debt without it having to earn charges.

You can even use the card like the way you use cash to buy things, but you need to pay the bank back within the period when the interest is zero percent. But sometimes, these may lead you to frequently make purchases using the card and eventually forgetting the time period for which the interest is free.

A credit card which offers zero percent interest for the initial few months is of great help to a person who is well organized financially and pays off his bills at the right time. It is a useful tool which can be used during emergency, like for hospitalization in case of an accident.

An interest free card is not only for any unhappy events but it can also be a handy tool for any happy or good event, like you find a sale going on in your near by mall, these interest free cards is of great help in such time.

Maintaining a good credit performance would let you have numerous interest free credit cards from various banks. If you are a responsible person and can efficiently manage your spending habits then these cards can be of lots of help.

by: Ferdinand Eusebio.

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