Interest-free Credit Card: A Complete Guide

by
Interest-free Credit Card

In today’s world, credit cards have become a convenient way to make purchases and manage our finances. But did you know that some credit cards don’t charge interest? These are called interest-free credit cards. In this article, we will explore what interest-free credit cards are, how they work, and what benefits they offer.

What’s a credit card with no interest charges?

An interest-free credit card is a type of credit card that allows you to borrow money without paying any interest on your purchases for a certain period of time. This means that you can buy things now and pay for them later without being charged extra fees for borrowing the money.

How Does it Work?

When you use an interest-free credit card, you make a purchase and the credit card company lends you the money to buy the item. Then, you have a certain number of days (usually between 44 to 55 days) to pay back the amount you borrowed. If you pay the full amount back within that time, you won’t be charged any interest.

Example:

Let’s say you buy a new phone for $500 using an interest-free credit card. You have 55 days to pay back the amount. If you pay the full $500 within those 55 days, you won’t be charged any interest. But if you don’t pay the full amount within that time, you’ll start being charged interest on the outstanding balance.

What are the benefits of an interest-free credit card? 

The benefits of an interest-free credit card include:

  • You won’t pay interest on your purchases during the promotional period, which can save you a significant amount of money.
  • You can use the card for large purchases or expenses without worrying about interest charges.
  • You can spread your payments over several months, making it easier to budget and manage your finances.
  • No interest is charged on purchases or balance transfers during the introductory period.
  • You can save hundreds of dollars in interest fees by paying off your balance before the introductory period ends.
  • You can choose how much to pay each month, as long as you pay the minimum payment to avoid late fees.
  • Many interest-free credit cards offer rewards, such as cashback, travel points, or purchase protection.
  • Using an interest-free credit card responsibly can help you build credit and improve your credit score.

What are the drawbacks of an interest-free credit card? 

Some drawbacks to consider:

  • The interest-free period is usually limited, and you’ll need to pay interest on your balance after the promotional period ends.
  • Some interest-free credit cards may charge fees, such as annual fees or late payment fees.
  • You may need a good credit score to qualify for an interest-free credit card.
  • After the introductory period ends, regular interest rates and fees may apply.
  • You may be charged a balance transfer fee, which can range from 3-5% of the transferred amount.
  • If you miss a payment, you may be charged a late fee, which can be high.
  • Missed payments or high credit utilization can negatively impact your credit score.

Which interest free credit card is really good

Based on the search results, here are some of the top interest-free credit cards that are worth considering:

Credit Card Best For Intro APR Ongoing APR Annual Fee Bankrate Score
Bank of America Customized Cash Rewards Shopping 0% for 15 billing cycles on balance transfers and purchases 19.24% – 29.24% Variable APR – 4.3/5
Wells Fargo Platinum Card Longest promotional interest offer 0% for 18 months on balance transfers and purchases 12.49% – 24.49% Variable APR No annual fee –
Citi Simplicity Card Longer interest-free period for balance transfer 0% for 21 months on balance transfers 15.49% – 25.49% Variable APR No annual fee –
Chase Freedom Flex Flexible rewards and cashback 0% for 15 months on balance transfers and purchases 20.49% – 29.24% Variable APR $0 annual fee –
Amex EveryDay Credit Card Travel rewards and interest-free financing 0% for 12 months on balance transfers and purchases 15.49% – 25.49% Variable APR $0 annual fee –

When choosing the best interest-free credit card for you, consider the following factors:

  • How long do you need to pay off your balance without interest?
  • What is the interest rate after the introductory period ends?
  • Are there any balance transfer fees, annual fees, or other charges?
  • Do you want cashback, travel rewards, or other benefits?
  • Do you have good or excellent credit to qualify for the best interest-free credit cards?

Can I use my interest-free credit card for international transactions?

According to some research, the answer is yes, but with some conditions. Some interest-free credit cards do not charge foreign transaction fees, which means you won’t be charged an additional fee for making purchases or withdrawing cash abroad. However, some cards may still charge interest on cash advances or foreign transactions, so it’s essential to review your card’s terms and conditions.

Here are some key points to consider:

  • Not all interest-free credit cards are created equal. Some may charge foreign transaction fees, while others may not.
  • Even if your card doesn’t charge foreign transaction fees, you may still be charged interest on cash advances or foreign transactions.
  • It’s crucial to check your card’s terms and conditions to understand the fees and interest rates associated with international transactions.
  • Some cards may offer better exchange rates than others, which can save you money on international transactions.

FAQs

Can I add additional cardholders to my interest-free credit card? 

Yes, you can add additional cardholders to your interest-free credit card, but you’ll need to share the single credit limit on the account. The primary cardholder will be responsible for clearing the debt.

Can I use my interest-free credit card abroad? 

Yes, you can use your interest-free credit card abroad, but you may be charged foreign transaction fees, which can range from 1% to 3% of the transaction amount. You may also be charged interest on cash withdrawals.

Read More: