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Interest Free Credit Cards:
Borrowing Interest Free 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 you can jump through. When it comes to borrowing without interest.

Here are some tips for borrowing money interest free:

  • Look for 0% balance transfer deals.

    The secret to interest-free borrowing on a credit card without paying a penny for the privilege 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
    are wonderful ways of borrowing money interest free if you have a large purchase to make, like a new fridge freezer for example, or a new three piece suite.  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, work 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 (and ensure you're truly borrowing without interest).  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 (which is one step above borrowing money interest-free).  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.
  • Spend in a different way.

    One other technique for borrowing without interest 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 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 make you come unstuck, and keep in mind these secrets of interest-free borrowing.

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