Is Juggling Interest Free Credit a Good Idea?

Is Juggling Interest Free Credit a Good Idea?

by David Redmond on 20 May, 2011

With the emergence of interest free credit cards over the last few years, many people have hit upon the realisation that they can take one out, and then continually transfer to new ones when the interest free period runs out (taking advantage of introductory 0% balance transfers while they’re at it). But is it a good idea?

The logic certainly seems sound, and with so many available it almost seems possible to keep up interest free credit for a very long time indeed. However, there are a few negative factors that need to be taken into account.

Credit Ratings

Although no one knows the exact formula credit ratings agencies use to calculate credit (it is a closely guarded secret), it is known that previous credit applications are a significant factor. If you have been turned down for credit numerous times then that will have a negative effect on your credit rating, which will in turn make it more likely that you’re turned down again.

Good credit ratings are achieved by demonstrating the ability to pay, and on time. Given that taking out a credit card and paying back the money on time every month will count in your favour, doing the opposite – taking out a credit card, running up a huge bill and never paying it back, is likely to count against you.

The Application Gamble

Beyond your credit rating, you’re gambling on being able to obtain an interest free credit card each time. Yes, they’re pretty easy to come by, but unless you do have a rock solid record, you can’t guarantee you’ll be accepted each time. And if you don’t manage it, you could get locked into paying interest you can’t afford.


Finally, although it may work as a short term solution, it’s never a good idea to live off debt. With a measly state pension to look forward to and impossible house prices, it’s a far better idea to get yourself sorted as early in life as possible and start putting money away. With this in mind, if you absolutely must get an interest free credit card, best to view it as a cashflow solution and not go beyond the interest free term.

About the Author

David Redmond

David Redmond is a Partner of Don Gilliard Finance Group. He is a fee-only, independent financial advisor and financial planner. For over 15 years, he has been helping individual investors and their families realize their investment goals.