Monday 14 July 2014

Loans for People on Benefits - Interest Free Credit Cards (Part 3 of 20)

This Post is Part 3 of 20 exploring all the options available when taking out loans for people on benefits. One frequent question that the readers ask on the Millionaires Giving Money Blog is - Do Loans for People on Benefits Really Exist? After responding to a handful of emails I was inspired to create a 20 post series exploring all the ideas and options for loans for people on benefits, unemployed people, and disabled people. Before you take out a loan it's important to consider the loan amount and the total amount repaid. You should also try to look for the lowest APR loan as this will save you money in interest payments. You should also complete an income and expenses form to see if you can afford the monthly repayments so you avoid getting yourself into financial hardship. So without further ADO here is IDEA 3 of 20.

Loans for People on Benefits - IDEA 3: Interest Free Credit Cards

Depending on your credit score you might be eligible for interest free credit cards which is a sort of loan for people on benefits. Interest free credit cards are great because you only repay what you borrow only paying a small fee for the administration process. Interest free loans beat payday loans hands down because the APR is zero. 

To get started get a free copy of your credit report and find out what your credit score is. You should then improve your credit score by paying off any small debt and make more than the minimum repayment. If there are any problems or false information on the credit report then rectify these problems otherwise it will affect any loan of credit card applications. 

Once you're repaired your credit history and improved your credit score you should call your existing credit card company to see if they have any interest free offers. If they don't you need to apply for credit cards which offer a introductory interest free period. There are many credit card companies such as Capital One, Wells Farco, and Bank of America who offer introductory credit cards at zero percent interest. Be careful not to apply for too many at once. As a rule of thumb just apply for two at a time otherwise you'll be seen as being desperate for credit which might result in your application being declined.

Once you receive your interest free credit card you can spend using it interest free. Some credit cards also the facility to transfer money into your checking account for free. Interest free credit cards are a great way to borrow money and a great option as a loan for people on benefits. You will only pay what you borrow along with a small administration fee. Again before you take out the credit card loan for people on benefits consider the monthly repayments and check to see if you can afford them. Failure to make the minimum payment of the credit card balance will invalidate your interest free offer and you will revert back to paying the typical APR.  

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