There is no such thing as a free lunch; this is particularly true in the world of finance. When it comes to money there is always a catch. However, that doesn’t mean you can’t take advantage of this like interest-free grace periods. You can take advantage of “interest-free” periods and make them work for you and here’s how.
Read the Fine Print
Just like nobody ever reads the software agreement, very few people ever read their credit card agreements, but you need to. This is where you will find any hidden charges and fees. Don’t sign up for an interest-free credit card only to find you have to pay a monthly fee instead, so make sure you read before you sign anything. Here is a video showing you why you need to read the fine print.
Don’t Borrow for Nothing
This isn’t free money and just because it is “interest-free” doesn’t mean it is an excuse to do some frivolous shopping and that money still needs to be paid back. While you are in the interest-free period, continue to make payments but put them in an interest bearing account until the time comes for you to make a balloon payment. While you are saving money on the interest, your money is also working for you.
Repay the Amount in Full
Check with your agreement there is usually a minimum repayment during the interest-free period you will have to adhere to otherwise your interest rate will skyrocket. If you want to avoid your payments skyrocketing and a massive increase in interest rates, work out how many payments you will have to make during the grace period to pay the loan in full. Make the minimum payment but put the rest into an interest bearing account until the time comes to pay the entire amount back.
Keep Up the Repayments After
After making payments for a while, it will become a routine transaction for you. Even though your loan has been repaid in full and the account is closed. Continue making the payment only this time, pay them into an investment account. It won’t take long at all before you have yourself a nice little nest egg.
Remember “interest-free” isn’t exactly free and there is likely to be some service charge involved in any interest free loan. You are still going to have to pay back the entire thing in full so be prepared for that. Never borrow money that doesn’t serve a purpose, a new set of golf clubs or a Prada purse isn’t a purpose, so think twice before you take free money.