Are There Disadvantages of Zero Interest Credit Cards?

A zero interest credit card sounds really good. Being able to use the card to buy whatever you wish and knowing that you will be able to have the money without paying any interest can seem extremely tempting and you may wonder why everyone doesn’t have a card like this. There are some disadvantages and risks to having a card like this though. It is worth being aware of these and then you will be able to make a decision as to whether they will be the rights ort of card for you or whether you should look at other types,

Zero Interest Period Will not last Forever

The first thing to note is that the zero interest period on the card will not last forever. It is normally just for a set amount of time and then it will change to a variable rate. This means that you need to be aware that after a while you will start to be charged interest. You will not have the money available to you to borrow for free, forever.

Card Will Need to be Repaid

The credit card will need to be repaid at some point. This might sound obvious to some people, but there will be some that will not even think about the repayment. They may even think that it I free money that they can spend. People might even use the card as an excuse to treat themselves to lots of new things that they would not normally be able to afford and think that they will be okay because there is no interest to pay. They might even think of it as free money.  However, it is not and the money does not belong to the card holder and therefore will need to be repaid at some point and it is important to bear that in mind and think about how you will manage to repay it before you start spending money.

Minimum Payments Have to be Made

It is also worth noting that you will normally still have to make minimum payments on the card each month. Although these will not be large amounts of money, it could be the case that you will need to make sure that you allow for them and set a budget so that you can afford them. Make sure that you are therefore aware of how much they will be and then you will be able to check to see whether you will be able to afford them.

When Zero Interest Period Ends Interest Rates Could be High

The zero interest period could only last for around six months and then there will be interest payable on the card. This means that you will then need to start paying interest if you have an outstanding balance on the card when you receive your statement. You could find that the interest rate is a lot higher than you might expect. This is because the interest is often set at a higher rate to make up for that fact that you have not paid interest for a while. If you can afford to repay the whole outstanding balance just before you start paying interest then you take advantage of this sort of card. You might also be able to do a balance transfer to a different card which might have zero interest or lower interest. However, you need to be aware of what you need to do before taking out the card and think about whether you think that it is a good idea to take one out or whether you think that it will be too risky.