Who else wants a credit card that doesn’t charge interest on purchases or balance transfers for a given time period?
Credit cards give you convenient means to make purchases and pay for them later, but this can often come at the cost of interest. If you, like many others, wish to make purchases or transfer balances without the burden of interest, an interest-free credit card could be for you. Most of these cards don’t offer interest-free for the life of the card, so you’ll need to compare your options to make sure you’re choosing the right card for you.
Exclusive ANZ Platinum Credit Card Offer
Exclusive to this site, pay no annual fee in the first year and take advantage of low introductory rates on purchases and balance transfers.
- $0 p.a. annual fee for the first year ($87 p.a. thereafter)
- 0% p.a. for 3 months (reverts to 19.74% p.a.) on purchases
- 0% p.a. for 12 months on balance transfers
- Cash Advance Rate of 21.49% p.a.
- Up to 55 days interest free
- Minimum Income Requirement of $35,000 p.a.
Credit Cards with Interest-free Offer
What is an interest-free credit card?
An interest-free credit card, as the name implies, doesn’t charge any interest. However, these interest-free periods usually expire at some point or the other, and not all transactions fall under the promotion.
There are also different types of interest-free cards available. Some cards may offer a promotional interest-free period on balance transfers, while another may provide interest-free days on purchases. Some credit cards offer both, but you may be unable to take advantage of both offers at the same time. It is also important to note that interest-free periods never apply on cash advances.
What are the benefits of an interest-free credit card?
You can look forward to multiple benefits when using an interest-free credit card. Depending on the card you get, here’s what you can expect:
- Promotional interest-free purchase rates. You can find credit cards that offer promotional 0% p.a. purchase rates that are in place from 3 months to 15 months. You don’t have to pay any interest towards purchases until the end of this period, after which any outstanding balance starts attracting the card’s purchase rate. The sooner you make a purchase, the longer you get to repay it without paying interest.
- Standard interest-free days. Most Australian credit cards give cardholders the ability to make use of interest-free days on purchases, which normally vary in between 44 and 55 days. To make use of these interest-free days, you have to pay your account’s closing balance in full before each due date.
- Promotional interest rates on balance transfers. If you have an existing credit card that charges high interest, you can save money in the form of interest by transferring its balance to a card that comes with an introductory 0% p.a. balance transfer rate. Such promotional balance transfer rates can stay in place from 6 to 24 months.
- Global acceptance. Your interest-free credit card is a conventional credit card, and it would, in all likelihood, come with a Visa or Mastercard affiliation. Therefore, you can look forward to using your card worldwide, at EFTPOs terminals and ATMs alike.
Drawbacks of an interest-free credit card
If you’re considering using an interest-free credit card remember that things can go wrong if you don’t use your card in the right way, so take some time to go through the following:
- Cannot use offers concurrently. If your new credit card comes with a 0% p.a. interest rate offer on balance transfers as well as purchases, find out if you can use both the offers at the same time. Chances are you can’t.
- Rollover balances. If you plan to use the regular interest-free days on purchases that your card offers, it is pertinent that you pay your account’s outstanding balance in full every month. If you don’t, purchases start attracting interest from the time you make them.
- Excluded transactions. Many cards offer promotional interest-free periods on balance transfers, but not as many do on purchases. Cash advances, which include withdrawing money from ATMs, buying foreign currency and spending at casinos, never come with interest-free days.
- Balance transfers. If you opt for a balance transfer, you can’t use your card’s standard interest-free days on purchases until you pay the transferred balance in full. With promotional balance transfer offers, find out how much interest you’ll have to start paying once the promotional period expires. In some cases, outstanding balances from balances transfer start attracting a card’s cash advance rate, which can be noticeably higher than its purchase rate.
How can I compare interest-free credit cards to find the best one for me?
When comparing interest-free credit cards, pay attention to the following features:
- Number of interest-free days. Promotional interest-free periods on purchases can vary in between 3 and 15 months, and with balance transfers you can look forward to interest-free periods of up to 24 months. When it comes to standard interest-free days on purchases, know that some low rate cards don’t offer any.
- Fees. Some such cards don’t charge any ongoing annual fees, and with some others you may have to pay more than $100 p.a. If you plan to use your card overseas, find out how much you’ll have to pay as overseas transaction fees. Late fees credit cards charge can also vary.
- Interest rate. Once the promotional period comes to a close, you’ll have to start paying interest, so pay due attention to the card’s standard purchase rate. This becomes particularly important if you plan to keep balances rolling in your account from one month to the next.
- Extras. You can find interest-free credit cards that come linked to rewards programs, and you can also find features like complimentary insurance covers and access to concierge services. These extras come at a cost, which you end up paying as an annual fee or a high interest rate.
An interest-free credit card can help you save money, no doubt, but since you have multiple options from which to choose, make sure you compare them well before arriving at a decision.
Frequently asked questions
If I make a purchase on an interest-free card, repay it within the interest-free period, and then want to cancel my card, is it possible?
Yes, it is. As long as there is no outstanding balance in your account, you can usually cancel your card at any time.
Can I use an interest-free balance transfer card to transfer a balance from a personal loan?
Most Australian credit card issuers don’t accept balance transfers from personal loans, but some like Citi and Virgin Money do.
What eligibility criteria do I have to meet to apply for an interest-free credit card?
You should be at least 18 years old, you should be a permanent resident of Australia and you have good credit rating. You may also have to meet card specific minimum income requirements.