The title feels very alluring as it would be great to enjoy credit cards without bothering about the interest overload.Honestly speaking, such cards are now a reality in the rapidly changing financial world.However, it is essential to understand the benefits and disadvantages linked with interest free credit cards, and also their complete functioning.
The first question that strikes the mind is that why would the bank issue such a credit card on which it can not earn any interest money.The key factor here is publicity. Banks continuously want to increase their customer base, and what better attraction then a card which you can use to shop as well as pay money later without any overhead.A happy customer would be prompted to invest in other schemes also where the bank can make profit.
It is however important to know that no card will remain interest free forever. The interest would gradually creep in, after a year, 18 months, or after two years depending upon the scheme offered and the credit limit of the customer.This is very beneficial during times of slight cash crunch, when immediate monthly repayment is not possible.Under such circumstances, it is possible to hold out the payment back to the bank for a period ranging from 3 months to a year without any interest overload for good value cards.
As interest free credit cards are an attractive introductory offer, it is important to take into account several factors before choosing such a card.First and foremost, make sure that there are no hidden or overhead annual charges associated with the card.Read all the terms and conditions carefully to ensure that you don’t end up paying a fixed yearly processing amount to the bank, even though you are not paying any interest.
It is also necessary to check out the penalty clauses.Ensure that you are not paying exorbitant returns after the interest free period expires.If you are using your interest free card to transfer balance to other debt-ridden accounts, then it is worth noting that there are some processing and transfer fees associated.
Today, most banks have partnered with mass vendors like MasterCard and Visa. Several interest free credit cards are available under various schemes from international banks like HDFC, ICICI, Bank of America, etc.You can enjoy the benefits of such cards lifelong if your credit limit is properly regulated within the specified interest free period.