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Interest Free Credit Cards: A Guide To Use Them

By Ferdinand Eusebio

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.

A credit card makes loaning from the bank simpler and easier. After using the card, the bank will then charge a certain rate for the amount of money borrowed. This will add up until the customer is able to pay for the debt. The charge is usual a percent interest of how much you have actually used up. This is how the banks earn.

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.

The zero interest credit cards allow you to borrow money without any interest charges on the money borrowed for only a limited time. But this time period changes from one credit card Company to another, and also from one card to another. After the limited period gets over, these interest free cards resembles any ordinary credit cards and behaves as per the cards policies.

But, why do banks sell these interest free credit cards to the customers? The main idea is to pull more customers to their bank from other banks. A consumer who has credit card which charges high rate of interest will have higher dues to pay off. To avoid the debt to add on the customer would like to move the debts to another card which charges lower rate of interest. Thus, moving the debt from a card which charges high rate of interest to a card which charges no interest for the initial few months or weeks will allow the customer to buy more time to pay off his debts.

Another use of a zero interest card is to allow the person to make purchases as if he has made the purchase in cash, given that he pays the bank back within the period of no interest. But this can be counterproductive for the consumer in the sense that he would frequently make purchases without thinking that the grace period might end soon.

A credit card without any interest charges for a limited period offers huge benefit to a very organized person who pays all his bills on time, especially if he falls in an emergency situation like for example hospitalization due to accidents.

An interest free card can be beside you not only for any dire events but also any unexpected happy events like a sale in the nearby shopping mall. A card without any interest charges will be of great help in such situations.

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.

Are Interest Free Credit Cards right for you? Check our site and learn whether you can handle having this type of credit card in your possession.

Article kindly provided by UberArticles.com

Topics: Credit and Debit | Comments Off

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Article Citation
MLA Style Citation:
Eusebio, Ferdinand "Interest Free Credit Cards: A Guide To Use Them." Interest Free Credit Cards: A Guide To Use Them. 10 Jul. 2010. uberarticles.com. 24 Aug 2014 <http://uberarticles.com/finance/credit-and-debit/interest-free-credit-cards-a-guide-to-use-them/>.

APA Style Citation:
Eusebio, F (2010, July 10). Interest Free Credit Cards: A Guide To Use Them. Retrieved August 24, 2014, from http://uberarticles.com/finance/credit-and-debit/interest-free-credit-cards-a-guide-to-use-them/

Chicago Style Citation:
Eusebio, Ferdinand "Interest Free Credit Cards: A Guide To Use Them" uberarticles.com. http://uberarticles.com/finance/credit-and-debit/interest-free-credit-cards-a-guide-to-use-them/


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