Banks and microfinance organizations offer borrowers various types of interest-free credit products. MFOs promise microloans that you won’t have to pay for. Banks’ offers are more diverse – they include credit cards with a grace period, various types of installments, and refunds of interest paid. For organizations that earn money by lending money, this seems rather implausible. Interest-free loans are traditionally actively advertised by microfinance organizations. Interest-free loans are offered literally at every turn. Is there a catch in such promises and who should you trust more – banks or MFOs? Let’s figure out whether there really are loans without paying interest and where it is more profitable to take an interest-free loan, what conditions to pay attention to when comparing and how to choose the most suitable offer.
Features of interest-free loans and credits
An interest-free loan means that there is no fee for using armenia mobile database borrowed funds. Having received a certain amount of money as a loan, the borrower must return to the lender only the amount of the debt, without any interest. Such loans are issued by both microfinance organizations and banks.
In many cases, the stated absence of interest for using the lender's money is more of a marketing ploy than a real offer. Nevertheless, such offers can be found.
MFIs usually offer preferential terms to new clients. And to get an interest-free loan from a bank, you need to use a certain type of credit service. Most often, these are:
credit cards with a long grace period;
installment cards;
BNPL services.
Let's consider what each of them represents.
Cards with a long grace period
The interest-free period on a credit card, or grace period, can be from several weeks to several months. During this time, the cardholder actually uses the bank's money, but does not have to pay off the loan provided. What's special about it? You should always remember that there is a fee for annual card maintenance and other additional services.