Do Interest Free Credit Cards Have Hidden Charges?

August 31st, 2010

Interest free credit cards can offer cardholders a great way to save money on high interest charges. However, unless you’re aware of some of the hidden fees that can be associated with these kinds of accounts, you could be spending more money than you know.

Hidden Charges on Interest Free Credit Cards You Should Know About

Not all of these charges and costs will be exactly ‘hidden fees’, as some of them may be annual account fees or other charges that may apply to your card. Some customers may be prone to overlooking these if their mind is purely focused on the no interest aspect that attracted them to apply for interest free credit cards in the first place.

Uncovering Hidden Fees on Interest Free Credit Cards

While you might be receiving a 0% interest rate on your credit card balance for a given term, you may forget that an annual account fee could apply to your particular account.

To ensure you’re not paying more than you really need to, take time to compare the annual fee charges to other similar credit cards to make sure it’s not higher than it should be.

Another charge that can take cardholders by surprise is the sudden increase in interest rate when the 0% introductory rate expires. Remember, the majority of interest free credit cards only keep this low rate for a short term. When this expires, the interest rate on your outstanding balance will revert to whatever the standard purchase rate is on that card type.

If you withdraw cash from your credit card, you will attract a cash advance fee. You will also be charged interest on the amount withdrawn at the much higher cash advance interest rate from the day you withdrew the money. Even though the facility exists for you to make cash transactions, these are not advised, as you could end up paying far more in fees than you thought you’d be paying.

Additionally, one of the most common hidden fees to catch cardholders by surprise is the levy that could be charged if you miss any of your monthly repayments. Not only are you likely to receive a late payment fee, but you could also find your 0% interest rate will be instantly voided.

If you are thinking of applying for an interest free credit card, be sure to take some time to research the potential fees that could apply to your account in these instances.

You should also make sure that if you are using a 0% interest credit card to help you reduce your debt, work towards repaying as much of your outstanding balance as possible. This way you won’t go back to paying high interest on your credit card debt when the zero interest rate introductory period ends and you’ll be well on your way to becoming debt free.