How to Get 0% Interest on Your Credit Card
2009-06-02 by Lee
2009-06-02 by Lee
Very few people actually understand how interest is calculated on credit cards. The terms and conditions that come with each credit card can be long and complicated. Nearly all credit card companies show interest per month, which tricks some cardholders into believing they only pay 2% a year on their balances. However, in reality, it is possible to have a 0% interest rate on your credit card ??? all you need to do is pay off your balances each and every month.
Get 0% interest for life
Believe it or not, through wise use of your credit card, you can obtain up to 55 days of free interest. Most credit cards come with a 30 day billing cycle and a grace period of up to 25 days for the customer to make a payment. What this means is that you have 30 days to charge your card for that month, and then you have until the 25th of the next month to pay your balance before you incur interest charges for that month.
Financial scholars and the penny pincher alike know the benefits of charging everything then paying off the balance at the end of the grace period. As long as payments are made on time and in full, the APR of the credit card makes no difference. By paying with a credit card rather than cash, the money you spend gets a free 55 days of no interest, and instead is spent collecting interest in your bank account.
How much can this strategy save you? Let???s run the numbers
Assuming you spend $1000 each month on the 1st, you would get 55 days of full use out of your credit card issuer???s money before you had to pay it off. Assuming that your bank account yields 5% per year, you would earn $7.53 each billing cycle just from the difference of using the bank???s money rather than your own. In this case, credit cards actually earn you money, rather than costing you money.
More conservatively, let???s say you spend $1000 each month, but instead of spending it all on the first day of the month, you put it all on your credit card on the last day of each month. With a 25 day grace period like most credit cards allow, you would earn $3.42 in interest. Credit cards are interest free loans, as long as payments are made in full and on time.
Rewards make credit cards even better
Add in rewards offered by some credit card companies and the benefits get even better. With a 1% cash back credit card, your earnings would be $13.42 in interest and rewards from your credit card. The fact is too many people use credit cards to their disadvantage than to their advantage. Credit is an asset, while debt is a liability. Through reasonable accounting and intelligent buying, you can turn a profit with your credit card rather than let it take you for all you???re worth.
Get 0% interest for life
Believe it or not, through wise use of your credit card, you can obtain up to 55 days of free interest. Most credit cards come with a 30 day billing cycle and a grace period of up to 25 days for the customer to make a payment. What this means is that you have 30 days to charge your card for that month, and then you have until the 25th of the next month to pay your balance before you incur interest charges for that month.
Financial scholars and the penny pincher alike know the benefits of charging everything then paying off the balance at the end of the grace period. As long as payments are made on time and in full, the APR of the credit card makes no difference. By paying with a credit card rather than cash, the money you spend gets a free 55 days of no interest, and instead is spent collecting interest in your bank account.
How much can this strategy save you? Let???s run the numbers
Assuming you spend $1000 each month on the 1st, you would get 55 days of full use out of your credit card issuer???s money before you had to pay it off. Assuming that your bank account yields 5% per year, you would earn $7.53 each billing cycle just from the difference of using the bank???s money rather than your own. In this case, credit cards actually earn you money, rather than costing you money.
More conservatively, let???s say you spend $1000 each month, but instead of spending it all on the first day of the month, you put it all on your credit card on the last day of each month. With a 25 day grace period like most credit cards allow, you would earn $3.42 in interest. Credit cards are interest free loans, as long as payments are made in full and on time.
Rewards make credit cards even better
Add in rewards offered by some credit card companies and the benefits get even better. With a 1% cash back credit card, your earnings would be $13.42 in interest and rewards from your credit card. The fact is too many people use credit cards to their disadvantage than to their advantage. Credit is an asset, while debt is a liability. Through reasonable accounting and intelligent buying, you can turn a profit with your credit card rather than let it take you for all you???re worth.
