Over fifty percent of cardholders pay no interest

By Reno Charlton
News Editor, 20 March 2008

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WE all know how costly and frustrating it can be to have to pay loads of interest on our borrowing when we use credit cards, but according to a recent report over fifty percent of us are now savvy enough to avoid interest charges altogether.

The 50% of the credit card user population are avoiding interest charges by making use of the 'interest free period' available on any credit card when you pay off your balance in full each month.

What’s more, these card-savvy consumers are not just saving money on interest, but are actually making money from their card issuer.

The research

The research was carried out by fairinvestment.co.uk, and shows that many people who repay their balance in full each month choose to pay with a rewards based credit card, including cash back cards, air miles, travel rewards or retail reward cards.

This rather large group of cardholders use their cards regularly in order to accrue cash back, points, or rewards, but then they repay what they have spent on the card in full within the interest free period so that they do not get charged any interest.

James Caldwell, a director at the research company, 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."

Another industry official, Lyndsey Burton from Credit Card Comparison Online, added: "Having a rewards based credit card and repaying your balance in full each month can prove very lucrative, as it means that you can reap the rewards from the credit card provider but you don't have to put up with the interest charges - so you get to enjoy rewards, ease, and convenience for free."

The study also involved asking whether consumers had consolidated credit card debt with a loan, and nobody responded to say that they had done this.

Mr Caldwell 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."

Our advice? Clock up the cash back and keep your credit card repaid – start making some money back from your credit card company instead of handing it over in interest charges and fees!

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