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Credit cards with an interest-free period on purchases or balance transfers can help you cut down on existing card costs and avoid collecting debt. Most cards also offer ongoing interest-free days on purchases when you pay your balance in full. Use this guide to learn more about each type of card, how you can use them to your advantage and find a card that's right for you.
0% p.a. for 15 months on purchases
$150 Woolworths gift card
Offer ends 31 January 2021
Eligibility criteria, terms and conditions, fees and charges apply
Bendigo Bank Credit Card Offer
Enjoy 0% p.a. interest on purchases for 15 months and a $150 Woolworths gift card when you meet the spend requirement.
- Purchase rate of 0% p.a. for 15 months (reverts to 11.99% p.a.)
- $150 Woolworths gift card when you spend $1,000 in the first 90 days
- Cash advance rate: 13.99% p.a. | Minimum credit limit: 500
Compare interest-free credit cards
You can use the calculator in the table below to see how much you could save with an interest-free offer on purchases depending on how much you'll spend.
How do interest-free credit cards work?
These cards charge no interest on purchases or balance transfers for an introductory period. The interest-free period usually begins as soon as the card is approved and will last for a set number of months. If you're unable to repay balance by the end of the introductory period, any remaining debt will attract the relevant revert interest rate.
Interest-free deals are usually promotional, so you may need to apply by a specific offer end date to take advantage of the low interest rate. You're still required to make minimum repayments each month during the promotional period but it's wise to pay off as much as you can and pay off the account before interest applies.
What types of credit cards offer 0% interest?
There are three types of cards that offer 0% interest: cards with interest-free promotions on purchases, on balance transfers or both. Read on to understand how these three card types work and how you could use one to reduce your interest costs.
0% purchase credit cards
These cards charge 0% interest on new purchases for a promotional period, ranging from 3 - 17 months. Since most cards charge purchase rates between 8.99% - 21% 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
These 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 17% 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
These cards charge 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. This can be useful but also has 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.
When will I be charged interest?
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, reverting 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 collect 17.99% p.a. interest.
- 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.
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 offers up to 44 or 55 interest-free days on purchases.
You can usually only take advantage of interest-free days when you pay your balance off in full by the due date listed on your card statement. How many interest-free days you'll access will depend on when the purchase was made in your statement cycle. You can see Finder's guide to interest-free days to learn more about how this feature works.
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 that are relevant to your current financial situation.
- 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. If the card offers a promotional 0% interest rate for purchases or balance transfers, check how long the introductory period is available for so you can factor this into your repayments and budget. Consider your budget and calculate whether or not you can repay the balance you put on the card while the introductory offer is in place.
- Standard interest rates. The standard variable purchase and balance transfer rates for credit cards can be as high as 22% p.a. Make sure you check what the promotional rate reverts to when comparing options so that you can budget for any interest charges that may apply if you're still carrying a balance at that time.
- 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. But be careful you don't overspend in order to get more rewards, otherwise you may end up with unnecessary debt.
- Complimentary extras. Many cards offer extra perks such as complimentary international travel insurance, purchase protection, extended warranty coverage and concierge services. These perks may add value to your card, but only if you think you will 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 that the cost of the annual fee doesn't offset the interest savings you'll make from the interest-free offer. You may even want to consider a credit card with no annual fee to help save on your costs. Choose an interest-free card for your existing debt, make sure you look for this fee when comparing options so you can find one that’s affordable.
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:
- Interest charges. If you don’t pay your balance in full by the statement due date, interest will be applied to the remaining debt.
- 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.
- Overlimit fees. A fee of between $10 and $30 can apply if you don’t repay your credit card balance and go over your available credit limit.
- Cancelled promotional interest rates. If you don’t pay the balance, the interest-free promotion may no longer apply. 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 needs. You can compare a range of 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.
Some 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.
Which credit cards can I balance transfer to?
You can usually balance transfer to any bank and credit card, excluding banks you currently have a credit card with. See this guide for a complete list of banks that don’t allow balance transfers between each other.
When does the interest-free period start?
Promotional 0% periods begin when your credit card is approved. Interest-free days begin on the first day of your statement cycle.
Can I transfer my outstanding balance after my promotion has ended?
Yes. Transferring your existing balance after a 0% purchase or 0% balance transfer promotion has ended is allowed. Note that any balance transfer request will be subject to lending criteria and approval from the issuer.
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 should not 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. Make sure to check the Product Disclosure Statement for your individual card for the specific details.
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