Interest free credit cards
An interest free credit card gives your bank account a break and could save you over $260 in one year on a $2,500 purchase.
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If you have some big expenses coming up or need to pay off debt you already owe, there are different types of credit cards that offer no interest for an introductory period on purchases, balance transfers or both. There are also cards that offer no interest on an ongoing basis and charge a monthly fee instead. Use this guide to compare your options and figure out how you can save.
0% p.a. for 12 months on purchases and balance transfers
10,000 bonus Flybuys points
Offer ends 13 May 2021
Eligibility criteria, terms and conditions, fees and charges apply
Coles Credit Card - Exclusive Offer
Reward your spending with Flybuys points and save with 0% interest on balance transfers and purchases for the first 12 months.
- Ongoing $0 annual fee
- 0% on balance transfers and purchases for 12 months
- Collect 10,000 bonus Flybuys points when you make your first eligible spend within 30 days of approval
- Earn Flybuys point per $1 spent on eligible purchases
Compare interest-free credit cards
Use the calculator in the table below to see how much you could save with an interest-free offer on purchases based on how much you'll spend.
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What's in this guide?
- Compare interest-free credit cards
- How do interest free credit cards work?
- What types of credit cards offer 0% interest?
- Pros and cons of interest free credit cards
- How to compare interest free credit card offers
- What about credit cards with interest-free days?
- When will I be charged interest?
- Frequently asked questions
How do interest free credit cards work?
These cards charge 0% interest on purchases for an introductory period, usually from 3 - 17 months, beginning as soon as you're approved for the card. If you don't repay balance by the end of this period, any remaining debt will then be charged interest at the card's purchase rate.
Interest-free deals are usually promotional, so you'll need to apply by a specific offer end date to take advantage. You're still required to make minimum repayments each month (usually about 3% of your total balance) but it's wise to pay off as much as you can and pay off the entire account before interest applies.
How much money can I save with a 0% interest credit card?
Say you want to buy a new fridge that costs $2,000 and plan to put $200 a month towards paying it off. If you paid for it on a credit card with a 19% p.a. interest rate, it would take you 11 months to pay off the balance and cost you $194 in interest charges.
In comparison, if you had a credit card that offered 0% p.a. on purchases for 12 months, you could pay off the fridge over the course of 10 months and pay $0 in interest.
What types of credit cards offer 0% interest?
There are four types of cards that offer 0% interest: cards with interest-free promotions on purchases, on balance transfers, on both, or ongoing with monthly fees.
0% purchase credit cards
Offer 0% interest on new purchases for a promotional period, usually ranging from 3 - 17 months. Since the average rate in Australia is about 19% p.a., these interest-free offers are designed to help you save money and avoid collecting debt.
This type of card could be useful if you have some big purchases to make, such as buying furniture, booking a holiday or organising Christmas gifts, and you want more time to pay it off without being charged interest.
0% balance transfer credit cards
Charge 0% interest on balance transfers for a promotional period, ranging from 6 months to 30 months. If you're paying the average Australian interest rate of about 19% p.a., a 0% balance transfer could save you heaps on interest.
This type of card could be useful if you have a credit card or personal loan debt that you're struggling to pay off. Moving all the debt onto one card can simplify your repayments and help you save on annual fees as well.
0% purchase and balance transfer credit cards
Offer a 0% interest rate for both balance transfers and purchases for a promotional period. For example, a card could offer 0% interest on balance transfers for up to 15 months and 0% interest on purchases for the first 3 months.
This type of card could be useful if you have a credit card or personal loan debt you're struggling to pay off, but also need to make new purchases. Be careful with these offers as they also have the potential to add to your debt if you can't pay it off in time.
No interest, monthly fee credit cards
These cards charge a monthly fee instead of interest when you use it or carry a balance. This means you'll know exactly how much you'll have to pay. Monthly fees range from $10 to $22 and is set based on your credit limit.
This type of card is structured more similarly to popular buy now pay later plans, rather than other interest-free credit cards. When comparing, make sure the monthly fee is less than the interest you'd pay on a low rate card.
Pros and cons of interest free credit cards
Interest free credit cards can be a useful tool to help you save money when you buy now and pay later, as well as help you pay off existing debt and clear your balance faster. However, there are some potential downsides to these offers. Make sure you consider all the pros and cons.
- Save on interest costs. The obvious benefit of these cards is that you won't have to pay interest for the introductory period.
- Pay off debt faster. By not paying interest on your balance, you'll be able to pay it off a lot faster because the amount won't be creeping up every month.
- Complimentary extras. Some interest-free credit cards offer perks like travel insurance or rewards that could help you get more value out of the card.
- Revert rate. If you don't pay off your balance in full during the introductory period, this is the interest rate you'll pay on the remaining balance.
- Temptation to spend. Because you're putting off paying interest, it could be tempting to spend more than you can actually afford in the short-term.
- Credit score impact. If you already have a weak credit score, another enquiry could decrease it further and you may not be approved.
How to compare interest free credit card offers
If you want to get a credit card with an interest free period, consider the following features and details to find one that's right for you:
- Introductory period. Unless you've got a few specific short-term purchases in mind, the longer the introductory period, the better. This gives you more time to make interest free purchases and pay them back before the revert rate kicks in.
- Purchase interest rate. This is the rate you'll pay if you don't pay off your purchases before the introductory period expires, and also the rate you'll pay ongoing. This can be as high as 22% p.a., so make sure you factor this into your comparison.
- Interest-free days requirements. Credit cards that offer interest-free days for each statement cycle usually have specific conditions around eligible purchases and repayments. For example, cash advances are not eligible for interest-free days and you must pay your balance in full by the due date on each statement.
- Rewards programs. Some cards earn rewards or frequent flyer points for every $1 spent on the card. These programs can provide extra value, particularly if you have an interest-free credit card for purchases.
- Complimentary extras. Many cards offer extra perks such as complimentary international travel insurance, purchase protection, extended warranty coverage and concierge services. These perks add extra value to your card if you use them.
- Annual fees. While some cards charge $0 annual fees, others charge fees that can range from $20 to over $700 each year. Make sure the savings you'll get from the interest free offer offset the cost of the annual fee. You may even want to consider a credit card with no annual fee to help save even more.
What about credit cards with interest-free days?
Many credit cards offer a certain number of interest-free days for each statement period. For example, your card may offer up to 55 days interest-free on purchases.
Usually, you can only take advantage of this interest-free period when you pay the balance that's listed on your credit card statement in full by the due date. How many interest-free days you'll get for each purchase also depends on when it's made in your statement cycle. You can see Finder's guide to interest-free days to learn more about how this works.
When will I be charged interest?
Even if you get a 0% interest rate offer for purchases or balance transfers (or both), there are times when you may be charged interest on your account. Here's a snapshot for both 0% purchase credit cards and 0% balance transfer cards.
On a 0% purchase credit card:
- If you still carry a balance at the end of the introductory period. The 0% p.a. offer only applies for an introductory period and will go back to the standard purchase interest rate when the offer ends. For example, if the card offers 0% p.a. for 6 months, and reverts to 17.99% p.a., the interest-free period will end 6 months after your card was activated and any remaining balance from purchases will be collect the 17.99% p.a. interest rate.
- When you use your card for a transaction that isn't considered a "purchase". While most everyday spending will be eligible for the interest-free offer, transactions such as cash advances will be charged interest at the cash advance rate from the time they are made.
- If you don't make minimum monthly repayments. Even with an interest-free period on your purchases, you'll have to pay at least the minimum amount required by the due date on each credit card statement (usually about 3% of your total balance).
On a 0% balance transfer credit card:
- If you make new purchases. When you make a purchase on this type of card, the interest rate for purchases will apply. Even if you pay off the purchase in full by the statement due date, you won't be eligible for interest-free days on purchases with most cards while you're paying off a balance transfer.
- If you use your card for a cash advance or cash equivalent transaction. If you use your card for an ATM withdrawal, gambling or another cash advance transaction, you'll immediately attract the cash advance interest rate.
- If you don't pay off your balance transfer debt by the end of the introductory period. If the introductory 0% period ends and you have an outstanding balance to pay, any remaining balance transfer debt will attract the revert rate. This is usually the cash advance interest rate.
Whether you're making new purchases or paying off an existing debt, a card with an interest-free offer can help you save on interest and get your credit card under control. As there are many competitive 0% promotions in the market, it's important to compare your options to find the right type of card for your needs.
Frequently asked questions
Do I have to make repayments during the interest-free period
Yes, regardless of the type of interest-free credit card you choose, you will still need to pay at least the minimum amount required by the due date on your statement. The minimum amount will be listed on your statement and is usually around 2–3% of your account's closing balance, with a minimum dollar charge of around $20 – $30 (although sometimes these minimum amounts could be higher).
If you want to avoid ongoing debt and interest costs, you should pay more than the minimum amount whenever you can afford to do so. You can use Finder's credit card repayment calculator to help figure out how much to pay each month.
What happens if I don’t repay my balance on an interest-free credit card?
Regardless of the type of interest-free credit card you choose, you still need to make repayments by the statement due date each month. If you fail to maintain these regular repayments, some of the repercussions you could face include:
- Late payment fees. If you don’t make a payment by the statement due date, a late payment fee may be applied. This can be $10 to $30 on a standard credit card, or more on a charge card.
- Cancelled promotional interest rates. If you don’t make your minimum required payment, the interest-free promotion may be cancelled. This penalty varies depending on the card, so make sure you check the terms of your offer.
- Bad credit. Failing to make repayments could have a negative impact on your credit history – especially if your account goes into default.
If you’re struggling to make a repayment by the due date on your statement, it’s important to contact your credit card provider as soon as possible. Customer service staff will assess your situation and discuss repayment options based on your individual circumstances.
What is the best interest-free credit card?
There is no one best interest-free credit card as the right one for you will depend on your financial position and what you plan to use it for. You can compare all the features, including the type of 0% offer, how long the interest-free period lasts for, the revert rates that apply after the offer ends as well as any other fees or features that apply.
Credit cards also have eligibility criteria (such as credit history and minimum income requirements), so make sure that you check if you meet these before applying.
Can I use a 0% purchase card when I'm overseas?
Typically, yes. As long as the promotional 0% interest rate applies, your overseas purchases won't attract any interest. You may be charged a foreign transaction fee when you make a transaction in an international currency, though. Any transactions that don't count as purchases (such as withdrawing cash from an ATM or buying foreign currency) will be charged interest at the cash advance rate for your card.
What's the difference between 0% interest credit card offers and interest-free days?
A 0% purchase rate offer lasts for a limited amount of time from when you first get the new credit card. During this introductory period, you won't be charged interest on purchases as long as you pay the minimum amount listed on each statement.
In comparison, a credit card with interest-free days gives you a window of time in each statement period when you can make purchases without being charged interest. Usually, you need to pay the total amount owed on each statement to be eligible for interest-free days.
Do interest-free days apply during a 0% purchase promotion?
For the length of the 0% purchase promotion period, standard interest-free days aren't necessary. If your card comes with an interest-free days feature (say, for up to 55 days), then you'll be able to take advantage of this when the promotional period ends.
How many purchases will receive the 0% interest rate?
Once you've activated the credit card, all eligible purchases that you make will be 0% interest until the end of the promotional period. However, any purchases that haven't been repaid by the end of the introductory period will collect interest after that.
Will the credit card's annual fee be eligible for the 0% interest rate?
Credit card annual fees are usually not considered eligible purchases. So if you get a promotional 0% purchase rate credit card that also has an annual fee, you'll probably be charged interest on that part of your balance. You can contact the individual credit card providers to find out if this fee would be eligible for a particular interest-free promotion.
I'm planning to make a number of purchases over the next few months. How will the credit card 0% interest period work for these payments?
With this type of credit card, the promotional 0% interest rate is available for a fixed time period. For example, let's say you get a card offering no interest for 12 months on purchases from when you activate the card.
If you make a purchase on the day you get (and activate) your card, you will have 12 months to pay it off before any interest is charged. If you make another purchase after 3 months, you will have 9 months remaining for the 0% interest period, while if you make a purchase 11 months after getting the card, you'll only have 1 month interest-free for that purchase. After that, your 12-month 0% interest offer will end and the standard purchase rate will apply to new purchases.
How can I tell when the introductory 0% p.a. purchase rate period ends?
The quickest way to check when the introductory period ends is to look at your credit card statement or call your credit card provider and ask for the exact date that the 0% p.a. purchase rate period will end.
If you haven't applied for a 0% p.a. purchase rate card yet, you can check how long the introductory period is by looking at the advertised offer. For example, a card might give you 0% p.a. on purchases for 6 months, which means the introductory period would last for the first 6 months from when you get the card, or from the date you're approved for the card.
What is the interest rate after the introductory 0% purchase rate period ends?
After your 0% purchase promotion has finished, the outstanding balance will be charged interest at the card's regular purchase rate, usually known as the "revert rate". Make sure you check this interest rate before you apply. If you find yourself struggling to pay back what you owe, you can consider moving your outstanding debt to a 0% balance transfer credit card, which will give you more time to repay it interest-free.
Which credit card has the longest 0 interest period?
The cards on this page usually charge 0% interest on purchases for 3 to 15 months. You can sort the credit cards by "purchase rate" in the comparison table above to see which cards offer the longest interest-free period.
Can I pay my bills or government payments with no-interest cards?
While you could be able to use your card to pay for utilities and government payments, these transactions are sometimes listed as ineligible for the 0% introductory interest rate offer. Check the offer details or contact the credit card company directly to confirm what types of transactions are eligible.
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