|The Secret To Interest Free Borrowing On Credit Cards
Interest free borrowing sounds like a dream, but it’s actually a lot easier to do than you might think. All you need to do is some research and know what loopholes to watch for.
Here are some tips for borrowing money interest free:
- Look for 0% balance transfer deals.
The secret to borrowing without interest on a credit card is to get the right deal. If you are already paying interest on a credit card balance, you will need to look for a credit card which offers 0% interest on balance transfers, and ideally doesn’t charge you a transfer fee for the privilege (or charges a nominal fee). Oftentimes, these can be negotiated, so it’s worth a shot.
Not surprisingly, 0% balance transfer deals are the hardest deals to find, so you’ll have to do your homework. Look for the longest 0% deal you can find and shift your balance over. That way, you’ll be borrowing money interest free from one card in order to pay off another.
- Look for 0% purchase deals.
0% purchase deals and borrowing without interest are wonderful if you have a large purchase to make, like a new fridge or sofa. Again, make sure you find the longest running deal you can, and make sure the credit limit you get will cover what you want to buy.
You can actually make some money here too if you are on the ball. When you make your purchase, figure out how many months of grace you will get before you need to pay the whole sum off, in order to avoid paying interest on it. Pay just the minimum amount required each month to avoid charges.
Next, divide the remaining amount between the number of months for which the 0% purchases deal runs. Open up a high interest savings account and put the required amount of money in it every month, so that you actually earn some interest on it. At the end of the 0% deal, simply withdraw the money from the savings account – less the interest – and pay off your credit card in full. This way, not only are you borrowing money interest free, you're actually earning some more on top of it!
- Spend in a different way.
One other technique for borrowing without interest or interest free borrowing and making a little extra money on the side is to get a credit card which rewards you for making purchases. The Tesco MasterCard, for example, gives customers Tesco points every time they use their card, and these can be redeemed either in store or swapped for vouchers worth four times the original points value.
This requires discipline. Instead of paying for things directly from your bank account, move as much cash as possible from your current account into your savings each month, and pay for everything you buy using your credit card.
Once the bill comes in, clear it completely using the cash in your savings account – which has been sitting there earning you interest all month. You’ve also got the extra points or rewards offered by your particular card to enjoy.
Borrowing without interest or interest free borrowing can be highly beneficial if you do it right. You need to stay informed, however. If you lose track of what you are doing, it can end up being costly, so make sure that borrowing money interest free doesn’t tie you up.
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