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“Another type of credit card with an interest-free period you might have heard of is a balance transfer card...”

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What types of credit card offer interest-free periods?

All credit cards come with a standard interest-free period, but some come with a promotional interest-free period – and it’s important you understand the differences between them.

Promotional interest-free period on purchases

This is typically offered to new customers as an incentive to take out that lender’s credit card. There’s quite a lot of competition between credit card providers to offer the most enticing interest-free periods, so you can expect to find some cards offering 0% for upwards of 12 months, with some as high as 24 or 25 months. The one you qualify for will come down to your credit history and income.

With a promotional interest-free period, you won’t have to pay interest on any purchases you make within the time specified. However, you’ll still have to make at least the minimum repayment each month, although you won’t need to worry about accumulating interest until the promotional period ends.

These credit cards are typically reserved for those with a good credit history. If yours is less than perfect, you’re unlikely to qualify for the very best interest-free deals on the market.

Remember, your promotional period may be terminated if you breach the terms of the agreement. For example, if you don’t make the minimum repayment one month, or you spend more than your credit limit, you’re in breach of the agreement.

Promotional interest-free period on balance transfers

Another type of credit card with an interest-free period you might have heard of is a balance transfer card – but it’s quite different from the example we’ve outlined above. A balance transfer card is designed to simplify your existing debts and may even make them more affordable.

If you have a few credit cards, store cards and a personal loan, for example, and you’re finding it hard to keep track of all the different balances and bills, you can use a balance transfer card to clear these, leaving you with just one monthly payment to make. And because some of these cards come with a promotional interest-free period, they might even make your monthly payments more affordable – although be aware that there is often a fee to transfer your balances over.

It’s a good idea to clear your balance – or as much of it as you can – before the 0% interest period ends so you can avoid paying interest altogether. If you don’t manage this, providing you haven’t missed any of your monthly payments you could start shopping around for a similar 0% balance transfer deal and shift your remaining balance on to this.

Standard interest-free period

All credit cards come with a standard interest-free period, but this isn’t the same as a promotional interest-free period and you should avoid getting them confused. As we mentioned at the start of this guide, this period typically lasts up to a maximum of 56 days.

A standard interest-free period is effectively a grace period your credit card provider gives you to allow you time to receive your statement and pay off your balance before interest starts to be charged.

Say you opened a credit card with a standard interest-free period of 51 days, from the day you activate your card, you have 51 days during which you won’t have to pay interest on your purchases if you clear your balance. At the end of this time, you’ll have to pay interest on all the purchases you made during this period. You should keep the date your interest-free period lasts in mind when you make purchases. You won’t get 51 days interest-free after every purchase you make, but 51 days from the date of your latest statement.

You should try to pay off all the purchases made in those 51 days, regardless of whether they fall into two separate calendar months. You will be charged interest on any amount of your balance that remains unpaid after this time, as well as any of your balance you have already paid off. 

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Important things to remember

While you may be able to get a credit card that let’s you make purchases without charging you interest, you always have to pay interest when you use the card to withdraw money from a cash machine. That’s why it’s best to avoid this altogether, as it could also negatively affect your credit history. You’ll also have to pay interest if you use your card to take out foreign currency.

If you’re thinking of taking out a credit card to help you afford your everyday expenses, like food shopping and rent or mortgage payments, you may wish to reconsider. If you find that you’re unable to afford these basic living costs with your income alone, taking on credit won’t help your situation, as you’ll just have an extra bill to pay each month.

We understand how worrying it can be when you’re struggling to afford food or make your rent or mortgage payments on time, and you may feel tempted to apply for credit to help. If you’re in this situation, you can seek out financial advice and find out more about your options by contacting the Money Advice Service. Find out more information on their website here

Know if you're accepted before you apply with QuickCheck

  • Get credit - up to £1,500
  • QuickCheck won’t affect your credit rating
  • Get a fast response in 60 seconds

34.9% APR Representative (variable)
Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender

Check Now