Should I Switch to a Zero Interest Credit Card?

There are some credit cards which will allow the users to borrow money without having to pay any interest on what they have borrowed These can seem like a really great idea, but it is worth making sure that you are aware of the risks. Obviously being able to borrow for free is a big advantage and it can feel like there will be nothing that could better this, but you need to be really careful with this. There are some risks that you need to bear in mind.

• Free Credit Will Not Last Forever – it is worth noting that a zero interest credit card will not last forever. The zero interest period tends to only be for a short amount of time – normally not even as long as a month, which means that you will soon have to start paying interest again. You also need to think about the interest rate, as you could find that once you card starts charging interest you will have to pay a lot more than you would on a standard card. This means that you might need to make sure that you repay what you owe before the interest rate comes in or switch to a different card, if you can.  
• Could be Tempted to Overspend – having access to what will seem like free money could mean that you will be tempted to overspend. It can feel like you can have a fantastic shopping spree and not worry about the consequences. However, if you spend all of the money available on the card, you could end up finding it difficult to repay it. Then when you have to start paying interest on it, you could end up having to pay a great deal of money out. So, think about whether this might be a risk for you and whether you are the type of person that might just spend more money than they can really afford.
• Will Need to Repay it at Some Point – even if you are happy paying the interest once it kicks in, you will need to repay the card eventually. The money is not free and is not yours, you are just borrowing it and will need to give it back. It could take a long time and you could end up paying a lot of money for the privilege of having the money. It is worth thinking about whether you feel it is worth it. It is good to find out what the interest rate will be and working out how much that will be a year and considering whether it will be worth paying that much just to buy the items that you bought on the card.

So, although a zero interest credit card will be advantageous in the sense that you will be able to buy things that you cannot otherwise afford and not pay extra for them, you need to make sure that you repay it before you start having to pay interest. Otherwise you will have to pay more interest than you would on a standard card and you will end up paying a higher cost for the borrowing if you take you a while to repay the card. It could also tempt you to buy things that you would not normally buy and you need to think about whether this is something that you are likely to do. Some people will not be tempted but others will and this is just depending on your personality and how you tend to be with money. It is good to think about whether you feel that this is a risk for you or not.