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0 interest credit card

A 0 interest credit card has an initial period where no interest is charged at all. This can be either applied to purchases, balance transfers or both. There are two main ways in which zero interest balance transfer periods can be used for the benefit of the borrower and this article will cover both in detail.

The first major area of benefit from this feature is to avoid paying any interest on existing debts. If the existing borrowing is transferred to the new account, no interest is payable for the initial period (sometimes a year). This can represent a significant saving to the borrower, particularly for higher rate borrowing, allowing the borrower to focus on paying back the borrowing, rather than just maintaining the account without really reducing what's owed as is a common problem.

The second way that these offers can be of great benefit is less well known to most people, but perhaps even more valuable. This method is to use the balance from the new account to provide funds to be used in some way which makes a profit. One of the safest ways to generate income from this method is to deposit the balance into a high-paying savings account at a reliable bank. Although not even banks are totally safe from problems which can affect the consumer, this approach is far safer and more reliable than most.

Other investments that the balance can be used towards include stocks, shares, commodity and currency trading, starting or improving a business, bonds, promissory notes for business or real estate, or other types of investment. These different types of investment carry widely differing amounts of risk and return.

Starting a business is one of the most risky propositions, with more than 90% of new businesses failing. However, the returns if successful can be correspondingly great. As typical consumer credit accounts don't usually offer enough funds to try this approach with a large number of businesses, investing in a venture capital fund or similar source of diversified business investment can be used to spread the risk.

A 0 interest credit card can be very valuable if used wisely, but can also be very detrimental if used badly, so care should be taken to understand the possibilities as well as possible.