Many credit card consumers do not have to pay interest

There are always reports in the financial news headlines relating to the high cost of credit card use, namely as a result of the extortionate rates of interest that credit cards charge for the privilege of using them and spending on them. In fact, credit cards have taken the rap for much of the UK's personal debt mountain, with industry officials claiming that many people get bogged down with credit card debt because of all of the interest payments that are added onto the debt, sending it spiralling out of control.

However, a report released earlier this year showed that in fact around 50% of credit card users are not actually paying any interest on their credit cards, and this is because they are repaying the balance on their credit cards in full each month, thus avoiding the need to pay any interest. Credit cards all offer a limited interest free period of up to around 59 days, and those that clear the balance within that time do not get charged any interest for using the card, which enables them to enjoy the convenience and ease of using a credit without having to pay for the privilege.

One industry official said: "With the encroaching credit crunch being felt by consumers through the price of credit and the bills that come through their front door, it is uplifting to see that more than half of credit card customers can still afford to clear their balance each month and are not relying on their credit card for day-to-day essentials, getting further and further into debt." He added: "The fact that we had no respondents who said that they took out a personal loan to pay off their credit card balance is a strong indication that the credit crunch is having an affect on the availability of credit to consumers, just as it is for people trying to get a good mortgage deal."

Those that do clear their balances in full each month can enjoy the freedom and benefits of actually making something back from credit card firms, as they can benefit from a rewards based credit card. These credit cards are ideal for those that pay their balance in full each month, as they offer rewards for spending on the card. Points or cash back can be earned, and the points can be redeemed against discounts, vouchers, retails rewards, and more. However, for those that spread their balance and get charged interest the rewards will not be worth it, hence these cards are not suited to those that wish to spread the balance.

Whilst the number of people that are paying their balance in full and avoiding interest charges is encouraging it is difficult to tell whether the number of people repaying their balance in full will stay at this level. This is because higher bills, food prices, and petrol costs are all impacting on household budgets, and many are now struggling to keep on top of their finances.