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Navigating the landscape of different credit cards and card promotions can be a minefield, where a seemingly exceptional interest free credit card can later become an expensive burden with sky-high interest. Here we explain what you should be looking for when weighing up the best interest free credit cards for your circumstances.
What is an interest free credit card?
An interest free credit card can fall into one of two categories:
- Interest free balance transfer cards – This form of interest free credit card provides the ability to transfer a balance, or balances, from other credit cards for a set fee – the new balance then benefits from an interest free period.
Example – Santander offers 0% on balance transfers that can be completed at any time within 27 months from account opening. There is no fee and the balance can be paid over 19 months. When the deal draws to an end, the balance will be charged at 18.9% APR, with an initial 3% fee.
- Interest free purchase credit cards – This type of interest free credit card allows you to purchase goods and services as you would normally, but with the added bonus of the balance not attracting any interest over a set period.
Example – The Sainsbury’s Bank Purchase Credit Card offers 0% on purchases for 31 months. You can pay the balance over 19 months with no fees or interest, after which time the APR of 18.9% applies.
Interest free credit cards – Critical points to remember…
The best interest free credit cards combine to offer a 0% interest free period for purchases, in addition to the ability to transfer other balances at 0%. If you do plan on using your credit card this way, you should bear in mind that the card will only have a set limit. What’s more, balance transfers are usually accompanied with a maximum % amount of your credit limit.
For example – you make purchases up to a value of £50 on a £3000 limit credit card. These benefit from the 0% on purchases promotion for a period of 24 months. The limit left available is £2950. However, as the balance transfer offer only allows for 95% of your limit to account for a balance transfer, you are only able to transfer £2850 (95% of £3000) from your other credit card to your new credit card.
Another important pointer to understand is that in order to continue to benefit from these promotions, you must keep up with your minimum repayments – on time, every month.
Best interest free credit cards
|Credit card||Purchases||Pay the balance over||Representative APR (variable)||Balance transfers||Balance transfer fee||Representative APR||Pay the balance over|
|Barclaycard Platinum with Balance Transfer||0% for 25 months||19 months with no fees or interest||19.9% APR||0% for 25 months||No fee||19.9%||19 months with no fees or interest|
|Sainsbury’s Bank No Balance Transfer Fee Credit Card||0% for 31 months||19 months with no fees or interest||18.9% APR||0% for 28 months||No fee||18.9%||19 months with no fees or interest|
|Virgin Money Balance Transfer Credit Card||0% for 25 months||19 months with no fees or interest||18.9% APR||0% for 24 months||No fee||19.9%||19 months with no fees or interest|
|Lloyds Bank Platinum Balance Transfer||0% for 25 months||19 months with no fees or interest||18.9% APR||0% for 25 months||No fee||19.9%||19 months with no fees or interest|
|Bank of Scotland Platinum Balance Transfer Card||0% for 25 months||19 months with no fees or interest||19.9% APR||0% for 25 months||No fee||19.9%||19 months with no fees or interest|
|TSB Platinum Balance Transfer Card||0% for 28 months||19 months with no fees or interest||18.9% APR||0% for 28 months||No fee||18.9%||19 months with no fees or interest|
Three steps for using your credit card 0 interest
Given the advantages of being able to transfer a balance, or make purchases, that attract no interest, it isclear that the best credit cards are 0 interest credit cards. However, there are steps that you should take to ensure that this form of borrowing is a help and not a hindrance.
Step one – Plan ahead
Interest free periods only last for a set amount of time, after which there will be charges. Ideally, you should have created a budget and saved money each month to repay the balance in full come the end of the term (and in the process earning interest). If this is not possible, you should ensure that you know when the interest free periods end, and arrange a further balance transfer before the interest is applied.
Step two – Only choose low interest credit cards
Interest free credit cards in the UK differ greatly in relation to the APR they offer following the end of the interest free period. It is therefore wise to do your research and ensure that the APR that you may be hit with, should you forget or be unable to repay or move the balance, is not higher than it need be.
Step three – Understand your debt and create a budget
How much do you owe on all of your debts? Do you know your income versus your outgoings? Being in the picture when it comes to borrowing is essential if you are not to worsen your financial situation with credit card borrowing that you cannot afford.
With this in mind, you should create a list of your debts and update it every week. You should also write out your budget, detailing your income and expenditure, per month.