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Interest-free Credit :: Benefits

Updated on July 7, 2012
Interest free credit
Interest free credit

Interest-free credit cards allow you to spend as much as you want without paying interest for a certain period of time.  Credit cards that do not charge you interest on your balance transfer or purchases are called 0% credit cards.  APRs on average credit cards can be painful at best and crippling at worst.  Who wants to pay extra money for spreading out payments for larger purchases?  Although it helps to be able to buy an expensive item over time, the interest sometimes does not make it worth your while.  With a period of time where you can shop and spend without any APR, you could save a good deal of money on big purchases. 

Consider the following hypothetical situation.  If you want to buy a home theatre, but want to find an easy finance method to spread the financial load out over six months, you have a few choices.   One, you can buy it on time from the store.  The interest on your payments to the store is often unreasonably high.  Two, you can take a loan from your bank and make the payments over a period of time.   Here you run into the same interest problem.  The third option is an interest-free credit card.  With one, you can buy the theatre and pay it over the period of time when your APR is zero on the card.

Another kind of interest-free credit is offered by some cards.  With some cards you are offered a time frame within which you must pay the full amount owed.  If paid in full within the time frame, no interest will be charged.  If not, you must pay interest.  Most companies, however, work with the other method where you are given a period of six to eight months of 0 interest on balance transfers or purchases, after which you must pay the regular APR.  Companies that offer this method of interest-free credit are as follows:

  • Discover More Card: This card offers zero percent APR on all balance transfers for a period of eighteen months after which the normal APR will be levied.  Also, zero interest will be charged on any purchase for twelve months, after which normal APR will be levied.  Additionally a percentage of cash back bonuses are offered for categories like groceries, gas, home improvement shopping, etc.  The card has no annual fee.
  • Capital One Venture One Rewards Credit Card: With this card you get an innovative offer called miles per dollar.  For every dollar you spend on purchases you get 1.25 miles every day.  You can use your accumulated miles on hotel rooms, airline tickets, car rentals, etc.  Additionally you get rewards which you can spend on merchandise, travel, cards, etc.  A zero percentage interest rate will charged on purchases until January 2012 with no transaction fees in foreign countries, and no annual fee.
  • Citi Platinum Select MasterCard: Apart from a 0% APR on balance transfers for one and a half years, and 0% APR on purchases for one year, you get secure free online account management.  After the period of 0% APR your APR will be determined by your credit score between 11.99% and 20.99%.  No annual fee will be charged.

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    • Hyphenbird profile image

      Brenda Barnes 6 years ago from America-Broken But Still Beautiful

      Useful information here for a person who is looking for a card. I am proud and happy to be debt free (except my mortgage which is coming soon)and do not have any credit cards. But I still like to stay abreast of things. Regards, Hyph.

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