Never spend on a credit card after balance transferring to it

You will find that your balance is no longer interest free.

Why?

Credit cards have different transaction types such as balance transfers, purchases, cash advances and interest charged. Each type of transaction is treated in a different way, and processed in a different order.

Repayments

So whilst it may be 0% for balance transfers, purchases on the card and cash advances are likely to be at a much higher rate.

Repayments pay off the cheaper debt first. So any payments that you make pay off your interest free balance transfer and leave your purchases and / or cash advances to accrue more and more interest. The only way to avoid the interest is to pay off the entire debt including the balance transfer.

 

Interest Free Credit Cards

Get smart with your interest

There is no such thing as an interest free credit card as all credit cards ultimately charge interest. However, you may be able to avoid paying any interest if you are clever about how you use your card, such as being able to pay off the full balance before the payment date or switching to a card with an introductory interest free credit period.

How to stop paying interest

By far the best way to stop paying interest on your credit card is to pay the balance on time. All credit cards have an interest free period (on purchases - not cash advances) built in. So, if you have a splurge in the January Sales, you won't have to start paying for it until between four and six weeks after your purchases. If you are sensible, this can be a smart way of budgeting.

The interest free credit period is different for each credit card company, so compare the small print before you choose which credit card to go with.

Get an introductory interest free credit card

Some credit cards offer interest free credit introductory periods on purchases and / or balance transferts from other credit cards as a way of enticing new customers. Offers can include up to one year at 0% interest. However, you will have to start paying interest again once the interest free period is over so you either choose a card with a competitive interest rate or be prepared to transfer your balance once more.

Transfering your balance to a 0% interest free credit card

Transferring an existing credit card balance can be a smart way to take advantage of 0% introductory rates, although it is best if you can find a card that doesn't charge balance transfer fees. Balance transfer fees are often in the region of 3% of the balance transferred, meaning that the transfer is not really "interest free" even though a 0% APR is quoted. Be very careful about such transfers, as if you are transferring a balance of, for example, £5000, the fees for the transfer will be £150!