0% interest investing

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Interest free borrowing seems to be more and more available as the countries borrowing rate is at an all time low.

No Interest

Supa Swap discus how companies like Tesco, capital one and Chase Bank are offering borrowing at 0% interest for the first year.

Making Money From Money

Let the money earn you the extra cash, most interest given on money investment is now offered as tax free to try to get more people to invest in the banking system, so for example if you can borrow the maximum you can on an interest free basis and invest it wisely, and of course safely then the benefits can be very rewarding.

Example

If you borrow 50,000 and invest in a high interest account and lock it away for 1 year at 6% tax free interest, then this will bring you in 3,000 in interest for the year, the payments you have to pay on 50,000 will be around 5% for the year (2,500) so the interest will cover the payments, at the end of the first year you pay back the capital, minus the payments made, leaving you 3,000 profit in one year without doing anything. A very good return for free money.

Risks

Beware of the small print, make sure there is no early payoff clauses if you repay the loan within a certain time, most of these are if you pay more than 95% of the loan, maybe consider paying back 95% and reinvesting the rest with another interest free loan. Remember to ALWAYS read the small print.