Periodic nonlinearity (PNL) in displacement interferometers is a systematic error source that limits measurement accuracy. The PNL of coaxial heterodyne interferometers is highly influenced by the polarization state and orientation of the source frequencies. In this Letter, we investigate this error source and discuss two interferometer designs, designed at TU Delft, that showed very low levels of PNL when subjected to any polarization state and/or polarization orientation. In the experiments, quarter-wave plates (qwps) and half-wave plates (hwps) were used to manipulate the polarization state and polarization orientation, respectively. Results from a commercial coaxial system showed first-order PNL exceeding 10 nm (together with higher order PNL) when the system ceased operation at around ±15°??hwp rotation or ±20°??qwp rotation. The two “Delft interferometers,” however, continued operation beyond these maxima and obtained first-order PNLs in the order of several picometers, without showing higher order PNLs. The major advantage of these interferometers, beside their high linearity, is that they can be fully fiber coupled and thus allow for a modular system buildup.