How the interest-free period on a credit card saves you money

With some credit cards you have up to 55 days from the start of your monthly statement period before you get charged interest on your spending.

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Richard Whitten

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Amy Bradney-George

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Key takeaways

  • A credit card's interest-free days let you spend money now and then pay it off a bit later without paying any interest.
  • The interest-free period starts on day 1 of your card's 30-day statement period. Making a purchase earlier in the statement period gives you more interest-free days.
  • Credit cards offer between 44 and 55 days interest-free, but it depends on the card.

What are interest-free days on a credit card?

Credit cards have statement periods that usually run for 30 days. Day 1 of a statement period is also day 1 of the card's interest-free period.

Let's say your credit card gives you 55 days interest free. This means you have 55 days from day 1 of the statement period before you get charged any interest on your card purchases.

Any purchases made on day 2 give you 54 days interest free. By day 3 you have 53 interest-free days left. If you make a purchase on day 30, the last day of the statement period, you have 25 days before interest is charged.

Once you hit the 55-day mark you can pay off all your spending and pay no interest. Or you'll get charged interest on any unpaid balance on the card.

Check out credit cards with 0% interest rate offers.

Example: How to use the interest-free period on a credit card

Say you had a credit card that offers 55 interest-free days, with a statement period that starts on the 1st of each month and ends on the 30th. If you were making purchases in June, here's how it works:

  • 1 June. First day of the statement.
  • 30 June. Last day of the statement.
  • 25 July. The 55-day interest-free period ends. This is also the payment due date for this statement period.

Now here's how your card spending breaks down over this statement period.

  • You make a $200 purchase on 1 June. You don’t have to pay any interest towards this purchase until 25th July, which gives you 55 interest-free days.
  • You make a $100 purchase on 20 June. This is the 20th day of your statement period, which means you get 35 days interest-free before a payment is due on 25th July.
  • You make a $150 purchase on 30 June. This is the last day of your statement period but the purchase won't attract any interest until 25th July, giving you an interest-free period of 25 days.

In this example, you would have a credit card balance of $450 from new purchases on your June statement. If you paid the total amount owed by the 25th July, you wouldn't be charged interest on your purchases.

You'd also get interest-free days for the next statement period.

I've paid no credit card interest for 11 years – here's how I do it

Will I get a new 55-day interest-free period if I don't pay off my previous month's balance in full?

Usually, when you carry a balance over to your next statement period you won't be eligible for interest-free days for that statement period. To get the interest-free period back, you'll need to pay the total amount listed on your next 1-2 statements by the due date.

How do interest-free days work?

This visual example of interest-free days highlights the interest-free period (in green), when purchases are made, when the statement is issued and what happens if you pay less than the full amount for a billing cycle.
interest free days cc diagram

Key terms for interest-free days

  • Statement period or billing cycle. The statement period shows activity on your credit card account and usually runs for 30 days, or from when your last statement was issued to when the next one is issued.
  • Payment due date. This date is listed on your statement and tells you when you need to pay at least the minimum amount. If you want to get interest-free days, you'll usually have to pay the total balance by the due date.
  • Closing balance or payment closing balance. The total you need to pay by the due date on your statement if you want to get interest-free days for the next statement period. A "closing balance" is usually the total of what's owed on your account.
  • Minimum monthly payments. This is the minimum you need to pay by the due date on your statement to avoid late fees and a late payment listing on your credit report. You usually can't get interest-free days for purchases if you only pay this amount.
  • Purchase rate. The interest rate charged on purchases. Interest-free days help you avoid this interest charge.

Is a credit card with interest-free days worth it?

Most credit cards in Australia offer interest-free days on purchases. It might not be the most important feature to you, but it does give you more flexibility in how you spend.

Let's say you have a $2,000 purchase coming up. Paying cash would take a big chunk out of your savings but payday is still 2 weeks away.

In this case, interest-free days would be really helpful. You could make the $2,000 purchase today and wait a few weeks before you have to pay the purchase off.

How to make interest-free days work for you

  • Understand how the interest-free days and your statement period work. The interest-free period starts when your statement period starts. You don't get 55 days from the start of every single purchase. If you make a big purchase on day 30 of the statement period you have far fewer interest-free days.
  • Time big purchases carefully. If you have big purchases coming up and want to maximise your interest-free days, make the purchase at the start of your statement period. This gives you more time before you have to pay it off.
  • Choose your credit card carefully. Interest-free days are a great card feature. But don't forget to look at the card's annual fee, purchase rate and any perks or benefits, like rewards or frequent flyer points.

Finder survey: How long have Australians had their current interest-free credit card?

Response
5+ yrs37.5%
2 yrs27.94%
1 year13.24%
3 yrs13.24%
Less than 1 year4.41%
4 yrs3.68%
Source: Finder survey by Pure Profile of 1113 Australians, December 2023

Frequently asked questions

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Richard Whitten is Finder’s Senior Money Editor, with over eight years of experience in home loans, property, credit cards and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard started his career in education and textbook publishing in South Korea. He holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Bachelor of Education from the University of Sydney and a Graduate Certificate in Communications from Deakin University. See full bio

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34 Responses

    Jennie's avatar
    JennieMarch 20, 2023

    Do any of the 55 days interest free credit cards require a monthly minimum spend?
    There’s information about cash advances and making payments but I’d like to know if any credit cards require a minimum amount is spent each billing period (particularly if you plan to pay the balance by the due date?).

      Amy Bradney-George's headshotFinder
      AmyMarch 20, 2023Finder

      Hi Jenny,
      Credit cards don’t require you to spend a minimum amount each month. So you could spend between $0 up to your available credit limit in a billing cycle. Just keep in mind there is a minimum repayment amount, which will be shown on each statement. I hope that helps.

    Nicole's avatar
    NicoleJanuary 25, 2016

    Is paying telstra, synergy, Alinta gas , western power also a cash advance or can I use my credit card

      Debbie's avatarFinder
      DebbieJanuary 27, 2016Finder

      Hi Nicole,

      Thanks for your inquiry.

      If these falls under bill payments then typically they may be considered as cash advances. I suggest that you speak to your credit card provider directly to confirm whether the payments for the mentioned services or utility providers are considered as cash advances. You can also revisit your cardholder agreement with your credit card provider to learn more about their terms.

      To know more which credit card transactions fall on cash advances, kindly refer to our guide on cash advances.

      I hope this helps.

      Cheers,
      Debbie

    Hayley's avatar
    HayleyNovember 18, 2015

    Hi,
    If my statement closes on say the 30th October and I owe $100 on my credit card which is due 15th November, if I pay the $100 off on the 10th November and then proceed to spend another $50 on my credit card that same day, is my balance considered cleared on the 15th November and that $50 goes to next months billing cycle or will I be charged interest on that new $50 now?

      Jonathan's headshotFinder
      JonathanNovember 20, 2015Finder

      Hi Hayley, thanks for your inquiry!

      To allow us to assist you further could you provide us with a specific bank please?

      Cheers,

      Jonathan

      Hayley's avatar
      HayleyNovember 20, 2015

      Hi Jonathan,

      ANZ – Platinum rewards

      Jonathan's headshotFinder
      JonathanNovember 22, 2015Finder

      Hi Hayley, thanks for your response.

      Even if you had cleared your $100 outstanding balance, your entire balance (including the $50) would have to be cleared before your payment due date in order to receive interest-free days on your purchases.

      I hope this helps.

      Cheers,

      Jonathan

    Ben's avatar
    BenApril 7, 2015

    Hi

    Iv just got a mortgage and want to utilize a credit card with my monthly day to day spending so I can pay my weekly income straight off the mortgage. I then want to redraw from my mortgage to pay off my credit card each month.

    Can I get a card which will allow me to make both purchases and cash withdrawals which will be interest free over a 1 month period?

      Jonathan's headshotFinder
      JonathanApril 8, 2015Finder

      Hi Ben,

      Thanks for your inquiry.

      Please refer to the following link for a list of 0% purchase cards. As of this time, there are no interest-free rates on cash advances, although there are low rate cash advance cards available.

      You can press the “Go to Site” button of your preferred credit card to proceed with your application. You can also contact the provider if you have specific questions. A gentle reminder, please ensure to read through the relevant product disclosure statement and terms and conditions to ensure that you got everything covered before you apply.

      Cheers,
      Jonathan

    Maria's avatar
    MariaSeptember 30, 2014

    My question is:
    If I paid in full one period, it supposes I am not going to be charged with interest for that period (which is reflected in my next statement). My bank charged me interest anyway the next period. I asked the bank and they replied that only if I pay in full every period I am not getting charged with interest.
    Is that correct?
    Thanks…
    Maria

      Elizabeth Barry's headshotFinder
      ElizabethOctober 1, 2014Finder

      Hi Maria,

      Thanks for your question.

      This is correct. Only by paying your balance in full each month are you able to avoid interest on purchases each statement period.

      Hope this has helped.

      Thanks,

      Elizabeth

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