On the face of it, this seems to be extremely tempting as it would be great to enjoy credit cards without bothering about the interest overload. Truth be told; such cards are really available in today's economic market. However, it is essential to know the advantages and downsides linked with interest free credit cards, and also their complete functions.
The first question that strikes the mind is that why will the bank provide such a credit card on which it can not earn any interest profit. The answer lies in extending their own exposure as banks are always constantly increasing their customer base. This is very much easier to achieve with an attractive interest free credit card where the user could easily shop and pay cash later, minus the interest. A happy customer would be prompted to invest in different schemes also where the financial institution can make profit such as loans and mortgages.
However, no credit card stays interest free for life. The interest rate slowly but surely sneaks in after just a few months or a year or two, depending upon the scheme offered and the credit limit of the client. This offers an advantage when monthly repayment is not possible at times of tight cash flow. In such situations, the bank repayment can be placed on hold for a specified period that usually ranges from three months to one year without worrying about interest overload.
Several factors need to be considered before applying for any attractive interest free credit cards. First of all, be sure that the card is free from hidden or overhead yearly charges. Study all the terms carefully before making any decision to ensure that you don't have to pay additional yearly processing charges.
It becomes inevitable to confirm the penalty clauses. Make sure that you don't end up paying expensive interests as soon as the interest free time period expires. Also a noteworthy aspect is that certain transfer fees are associated if your interest free credit card is utilized to transfer balance to debt-ridden accounts.
Right now a number of international banks like Bank of America, ICICI, HDFC and others have partnered with mass vendors just like Visa and MasterCard, and have launched several schemes for interest free credit cards. You can take advantage of the benefits of such cards for a really long period if your credit limit is properly regulated within the specific interest free period.
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