Interest free credit cards

This article was fact-checked and reviewed by Nicole Pedersen-McKinnon, an accredited and award-winning finance broker and industry mentor. Content has been updated for 2023.

What is an interest free credit card?

An interest free credit card offers you a 0% interest rate, usually for an introductory period. After that, any unpaid balance will be charged interest until you pay it off. This gives you a set period of time when you can use the credit card without being charged interest.

Interest-free deals are usually promotional, so you need to apply before an offer ends to take advantage of the 0% interest rate. You also need to make minimum repayments each month (usually about 3% of your total balance) but it's wise to pay off more if you can.

• Methodology: How we chose these 0% interest credit card offers

  To determine Finder's pick of interest-free offers, we examine over 250 cards in our database. We narrow it down to cards that offer a 0% purchase rate for an introductory period, and also consider whether they are available through Finder. The other key factors we consider are:

  • The length of the introductory period (the longer the period, the higher the ranking)
  • Whether or not there is also a 0% balance transfer offer
  • The annual fee, including if it is waived in the first year
  • The interest rate or rates that apply after the introductory period
  • Whether or not it offers rewards or cashback

  Keep in mind: Our top picks may not always be best for you. Based on your situation, you may find certain features to be more or less important, so compare your options before you apply.

Example: How much you can save with an interest-free card

Say you want to book a holiday for $3,000 and plan to pay $250 off the balance each month.

If you paid for it on a credit card with a 19.82% p.a. interest rate, it would take you just over a year (13.48 months) to pay off the balance and cost you around $371 in interest charges.

In comparison, if you had a credit card that offered 0% p.a. on purchases for 12 months and made the same $250 monthly repayments, you could pay off the holiday in 12 months with no interest charges.

Types of credit cards that offer 0% interest

There are 3 types of cards that offer 0% interest:

• Credit cards with 0% interest on purchases
• Balance transfers credit cards
• 0% interest credit cards that have monthly fees instead

0% purchase credit cards

Offer 0% interest on new purchases for a promotional period, typically between 3-15 months and sometimes longer (e.g. 20 months). Since the average credit card interest rate in Australia is about 20% 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 booking a holiday, buying furniture or organising Christmas gifts, and you want more time to pay them off without being charged interest.

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0% balance transfer credit cards

Charge 0% interest on balance transfers for a promotional period, ranging from 6 months to 34 months. If you're paying an average Australian interest rate of about 20% 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.

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No interest, monthly fee credit cards

These cards charge a monthly fee instead of interest when you use them 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 are set based on your credit limit.

This type of card has a similar structure 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.

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Pros and cons of interest free credit cards

Interest free credit cards can be a useful tool to help you save money when you want to buy now and pay later. They can also help you pay off existing debt faster. But there are some potential downsides to these offers. Make sure you consider all the pros and cons.

How to compare interest free credit card offers

If you want to get a credit card with an interest-free period, consider these features and details to find one that's right for you:

• How long is the interest-free period?

Unless you've got some 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.

• What is the revert 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 – and can be as high as 27% p.a.

• What are the requirements for interest-free days?

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.

• Is there a rewards program?

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.

• Are there 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.

• Are there any account fees?

While some cards have $0 annual fees, others charge fees that range from $25 to over $700 each year. And if you get a no interest credit card that charges a monthly fee instead, the costs could add up over time. Either way, make sure the savings you'll get from the interest-free period will offset the cost of these account fees. You may even want to consider a credit card with no annual fee to help save even more.

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 are some examples of 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 19.99% p.a., the interest-free period will end 6 months after you get the card. Then, any remaining balance from purchases would be charged the 19.99% p.a. interest rate.
• When you use your card for a transaction that isn't considered a "purchase". Most everyday spending will be eligible for the interest-free offer. But transactions such as cash advances will be charged interest at the cash advance rate from the time they are made. This usually includes ATM withdrawals, foreign currency, gambling products (e.g. lottery tickets) and sometimes even BPAY payments. But keep in mind that the definition of a cash advance is different between credit card providers.
• 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. The interest rate for purchases will apply if you make a new purchase when you have a balance transfer. And even if you pay off the purchase by the statement due date, you won't 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.

The only time you'll never pay interest on a credit card is if you get a no interest credit card that charges a flat, monthly fee instead, such as the CommBank Neo or NAB StraightUp. But you'll still be charged fees while you're using the card and paying it off. That's why it's important to compare a few cards and choose one that works for you.

Frequently asked questions

• Do I have to make repayments during the interest-free period

  Yes, no matter what type of interest-free credit card you choose, you still need to pay at least the minimum amount required by the due date on each statement. This is usually around 2-3% of your account's closing balance, and the exact amount will be listed on your statement.

  As an example, if you spent $3,000 on a credit card with a 3% minimum repayment amount, you'd need to repay at least $90 by the due date on your statement. Paying more than the minimum amount also helps you avoid ongoing debt and costs. You can use Finder's credit card repayment calculator to help figure out how much to pay each month and what's affordable for you.

• What happens if I don't repay my balance on an interest-free credit card?

  If you don't pay at least the minimum amount listed on each monthly statement by the due date, some of the issues you could face include:

  • Late payment fees. If you miss a payment or make it after the statement's due date, you could be charged a late payment fee. Typically, it will cost around $10 to $30 on a standard credit card, or more on a charge card.
  • Cancelled promotional interest rates. The interest-free promotion may be cancelled if you don't make your minimum required payments. This penalty varies depending on the card, so make sure you check the terms of your offer.
  • Bad credit. Payment history is included on your credit report, which means late payments (or more extreme default accounts) could lower your credit score.

  If you're struggling to make a repayment on time, contact your credit card provider as soon as possible so they can 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 because the right one for you depends on your financial position and what you plan to use it for. You can find a card that works for you by comparing features including the type of 0% offer, how long the interest-free period lasts and the revert rates that apply after the offer ends as well as any other fees or features.

  Credit cards also have eligibility criteria, such as credit history and income. Banks and other lenders need to consider these details as part of their responsible lending obligations, so make sure you check if you meet these requirements before applying for a card.

• Can I use a 0% purchase card when I'm overseas?

  Yes, as long as the promotional 0% interest rate applies – and the card is accepted overseas – your overseas purchases won't attract any interest. But you may be charged a foreign transaction fee when you make a transaction in an international currency. And if you withdraw cash, buy foreign currency or make any other transactions that are considered "cash advances" (instead of purchases), they are 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 an introductory period when you first get the new card. During this time, you won't be charged interest on your credit card 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 period 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 promotional 0% purchase rate period, standard interest-free days aren't necessary. If your card comes with interest-free days (for example, up to 55 days), you'll be able to take advantage of them when the promotional period ends.

• I'm planning to make a number of purchases over the next few months. How will the credit card's 0% interest period work for these payments?

  With a 0% purchase rate credit card offer, 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, and if you make a purchase 11 months after getting the card, you'll only have 1 month interest-free for that purchase. After that, the 12-month 0% interest offer will end and the standard purchase rate will apply to new purchases.

• What is the interest rate after the introductory 0% purchase rate period ends?

  The ongoing interest rate for purchases, also known as the revert rate, is different for each credit card. Purchase rates in Australia typically range from around 8% p.a. to 27% p.a. in 2023.

  You can check this rate before you apply – look for details of what the 0% interest rate reverts to at the end of the introductory period or check the Key Fact Sheet made available before you apply.

  You could also look at your credit card statement, online account details or contact the credit card company. 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?

  Introductory 0% interest rate offers change regularly, so there isn't one card that always offers the longest 0% period. In general, the cards on this page usually offer 0% interest on purchases for 3 to 15 months or more. And some balance transfer offers charge 0% interest for up to 34 months.

  You can sort the credit cards by "purchase rate" or "balance transfer rate" in the comparison table above to see which cards offer the longest interest-free period.

• Can you get a credit card without interest beyond the introductory period?

  If you repay the total amount listed on your statement by the due date, you'll typically get an interest-free period for purchases.
  There is also a small range of credit cards in Australia that charge no interest ever, with a flat monthly fee instead, including:

  • • CommBank Neo - 0% interest and a $12-$22 monthly fee based on your credit limit
    • Community First n0w - 0% interest and a $9-$19 monthly fee based on your credit limit
    • NAB StraightUp - 0% interest and $10-$20 monthly fee based on your credit limit
    • Westpac Flex - No interest ever and a $10 monthly fee
    • Wizitcard - No interest ever and a $19 monthly fee

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