3 Reasons People Use Interest Free Credit Cards
Posted on November 9th, 2011
Interest free credit cards are one of the most popular types of credit card around and so, if you are thinking of applying for a card, it is certainly worth knowing at least a little bit about them. This article looks at three reasons people use interest free credit cards and some of their key features.
Interest free payments
As you might expect, it is the ‘interest free’ component of this type of credit cards that helps to make them so popular with so many people. For those who are unfamiliar with them, when you are accepted onto one of these credit cards you get an initial period where you don’t have to pay any interest on your purchases.
This means that if you want to spread out paying off your balance over a few months, you will be able to do so without any interest building up.
Competitive APRs
Once the initial introductory interest free period has ended on your credit card, it will switch to the standard APR associated with the card. Typically, the APR (annual percentage rate) will be competitive, so you should be able to find a good rate on an interest free card. It’s worth doing some research to make sure you get the most competitive option open to you, though.
Positive payment hierarchy
One benefit of credit cards – no matter what type they are – is the positive payment hierarchy. This is something that will benefit you once the interest free period on your card has come to an end. It means that if you have multiple purchases that need to be paid off at different rates of interest, your credit card company is obliged to pay off those charged at the highest rate of interest first. This helps keep down your interest payments as much as possible when you’re paying off your balance.
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