How to Take Advantage of 0% Credit Cards

Image courtesy of Sean Macentee
Image courtesy of Sean Macentee

There used to be quite a lot of 0% credit cards out there and now there are less, but still a few available. These can be a fantastic way to make some extra money, but you do need to be well-disciplined.

To start with you will need to get a 0% credit card and use it to buy things rather than your other credit cards, debit cards, store cards or cash purchases. Use it for everything that you can and make sure that you set up a direct debit to pay off the minimum balance each month, as although it is 0% you will still need to make a small monthly repayment. Open a savings account and put the money that you would have used for these purchases in it and do not spend it. You will need the money to pay off the credit card at the end of the term. Make sure that you know when the end of the 0% term is and that you will be able to get your savings out of their account when you need to do this.

Some people use a credit card balance transfer on another 0% card at the end of the term to avoid having to pay the money back. Although this can be simple to set up and means you do not have to take money from savings to pay it back, it can have costs associated with it. Make sure that you check these before you decide whether you want to do this. You could, however, pay off the card that you have and apply for another 0% one and do the same thing again.

0% credit cards are better when savings interest is high as you can get a good return on the money that you have in the account. However, even when rates are low, it can still be worthwhile as long as you make sure that you pay off the outstanding balance before the 0% deal runs out. There are people that take out card after card and therefore make a good amount of return on the money that they have invested.

It is important to be careful with this sort of thing though. You nee dto consider whether you are the type of person that finds it easy to overspend, get into debt and is not disciplined enough to save. If this is you then it is best not try this. The problem can be that if you cannot repay the outstanding balance on the card when required, that interest will be applied. This is normally much higher than you would pay on other credit cards and it could mean that your 0% deal ends up being really expensive. So consider really carefully before you do this as to whether it is the right thing for you to do. With savings rates so low, it is not worth taking this risk if you are not completely sure that you will be able to pay back the outstanding balance at the end of the 0% period.

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Rachel Henderson is a professional freelance writer from the UK. She writes on many subjects but specialises in personal finance. As well as contributing to various blogs and websites she has her own website tracking her own money making process http://www.turnonepoundintoonemillion.com and sells her books through http://www.bowbridgepublishing.com.

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