A sudden trip abroad or an urgent repair job can drain your wallet. If you need some financial help managing the cash flow, interest-free periods provide an excellent opportunity to use. You can buy whatever you need without paying anything extra in exchange for borrowing funds.
Learning how interest-free periods work can become your key to saving some money. Banks know that customers frequently don’t understand the details of such offers well enough, thus leading to excessive charges. However, once you study these peculiarities, you’ll be able to make the best of them.
In this article, we’ll discuss how these interest-free periods work. We’ll highlight the advantages of using them, potential risks you should consider, and several techniques to keep your money safe.
How Interest-Free Periods Work
Firstly, let’s start with definitions. An interest-free period is a particular number of days during which your lender doesn’t charge interest on newly purchased goods. The majority of regular credit cards allow you to buy things with no interest during up to fifty-five or forty-five days. This period is directly connected with the duration of your statement period instead of being linked with any particular date.
If your monthly statement begins on the first of the month and offers fifty-five days of free interest, any product purchased on that day will get all fifty-five. On the other hand, the one bought at the end of the month would receive only twenty-five days until the start of interest accrual. In order to enjoy this offer to the fullest extent, you need to clear your statement balance by the deadline date.
Real Advantages of Using an Interest-Free Period
The greatest advantage of buying something during interest-free days is smoothing your cash flow. You won’t be forced to withdraw any funds from your savings accounts for a purchase and will earn additional income by keeping the funds in a high-interest savings account.
Also, smart users tend to combine these periods with cashback opportunities. Namely, you should apply for ING cashback credit cards, for instance, in order to earn some extra money on purchases. Just make sure you pay off your balance fully within the offered term in order to make these purchases for free.
Common Risks of Using Interest-Free Credit Card Offers
The main risk associated with interest-free purchases lies in failing to pay off your closing balance before the required deadline. Should you miss your payment or pay only partially, your card will lose its interest-free status. Then, you’ll be forced to pay high interest rates on the total debt accumulated from the date of your purchase.
Also, some types of transactions can ruin your interest-free period. Namely, cash advances tend to incur the highest interest from the very moment you’ve received this money. Moreover, any balance remaining from your previous bill can cancel interest-free purchases of any following ones.
Effective Management of Purchases
The most efficient method of keeping your money under control consists in tracking your statement period accurately. You should try making big purchases at the start of the statement cycle and thus get more time to cover your expenses.
Making an automatic repayment is another good technique to maintain your finances under control. It will help you to avoid any penalties or missing payments by arranging a direct debit several days before the deadline.
Using the Benefits of Interest-Free Days Safely
As you see, there’s nothing special about these financial products. If you know their basic principles and are responsible for maintaining your statement balance, you will be able to use this offer to your advantage easily. Check your products right now to be sure you have everything you need!
