There are now a large number of credit cards with 0% interest to choose from in the personal finance market. Not all cards are the same, though, and it is sound financial practice - not to mention common sense - to ensure that the card you apply for will suit your financial needs.
The first point to consider before applying for any card is that being approved is far from a foregone conclusion. If you have a poor credit rating, have accrued considerable debt or have defaulted on repayment on past credit agreements, then you may well find it difficult applying for a new credit card. As such, it may be prudent to look at alternative forms of credit.
In contrast, those with a reasonable credit rating have a wealth of choice of interest free credit cards. However, how can you be sure that the credit card you are applying for is the one best suited to your situation?
The key to finding the best zero per cent credit card is to identify how you are going to use it and what its intended purpose is for. Once you have a good understanding of that then you can begin to make a more informed decision.
For example, if you already hold a credit card but would like to transfer the balance from it, then it is well worth looking at some of the zero per cent balance transfer cards available. These cards are particularly attractive as you can drastically reduce the amount of interest you pay on your outstanding credit card balance each month. As such if you continue paying a decent amount towards the balance, you can make significant inroads into reducing the level of debt on the card.
Of course, using a zero per cent credit card in this way is only prudent if you can afford to make repayments that will reduce your balance quickly, particularly if you are seeking to pay off the outstanding debt while still under the introductory period of zero per cent APR. For people in this situation, ensuring they apply for a card that offers a low charge for transferring balances, as well as ensuring they receive the zero per cent rate of interest for as long as possible, makes sound fiscal sense.
Alternatively, if you are not looking to use the card for a balance transfer but perhaps have in mind a large single purchase, then a regular interest free credit card will suffice. The first point to note is that the issuing credit card company automatically insures any purchase on your credit card. This gives you peace of mind that should there be a problem with the transaction or the item bought, the credit card company will offer a guarantee in the last instance. Secondly, if you work out a repayment plan for your purchase and stick to it, you can purchase the item over a prolonged period and pay little or no interest.
For example, if you spend £1,000 on a new boiler and pay for it using one of the interest free credit cards that offer zero per cent on purchases for 12 months, you can pay back £85 a month over the 12 month period. After a year, you will have paid for the item in full, without interest charges. In such cases, the best card for a person in this situation is a card that offers a rate of zero per cent interest over the longest period.
Of course, many people do not use their new credit card in the ways identified above. For many, a new credit card is simply a temporary supplement to their earnings.
In such circumstances, the best types of cards available are not just zero per cent credit cards but ones that have a preferable rate of interest when the introductory offer expires. This is particularly important if you are unlikely to have paid off the balance in full before the introductory period ends.
Used prudently and with a little planning and forethought, there is likely to be an interest free card suited to most individuals' financial situation, providing they can meet the eligibility criteria.