The Difference between Interest Free and Balance Transfer Credit Cards
There are lots of different types of credit cards out there so it certainly pays to know a bit about your options. Two of the most popular types are balance transfer credit cards and interest free credit cards. This article looks at both of these types of card in order to determine exactly how they work and where their key differences lie.
Balance transfer credit cards
If you make a choice to have a balance transfer credit card, then it is most likely to be because you have an outstanding balance on one or more existing credit cards. When you open a balance transfer card, this balance would then be transferred over to the new card, effectively paying off the outstanding debt on your original card(s). While this would normally incur a fee, this is not the case with balance transfer credit cards. You would then generally have a set period during which the transferred balance was interest free, enabling you to pay it off quicker as you wouldn’t be paying interest on it.
Interest free credit cards
If you choose to have an interest free credit card, then this will generally come with an interest free period when you take out the card. This will last for a set period of time and then the standard rate of interest will start to be charged on your purchases. This means that interest free credit cards are useful for people who pay off the minimum payment each month as it means they can spread their payments without incurring an increasing amount of interest – as long as they pay off the balance before the standard interest starts to be charged, this can help with money management.
The main differences
This means that the key difference between the two cards lies in the balance transfer fee; while this is charged on interest free cards, it isn’t on balance transfer cards. Also, on balance transfer cards, while your transferred balance is likely to be interest free it’s unlikely that this will apply to your other purchases – in contrast to an interest free card where all purchases are interest free for the set introductory period.
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- How to Pay off 2011 Debt Faster with a Balance Transfer Card
- Balance Transfer Credit Cards
- NatWest and RBS credit cards offer 16 month 0% balance transfers
- Credit Card Terminologies for First Time Cardholders
