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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34 Responses

    Stellah's avatar
    StellahSeptember 16, 2014

    If I do an EFT with my credit card do I benefit the up to 55 days interest free credit if I pay back the balance in full

      Shirley Liu's headshotFinder
      ShirleySeptember 17, 2014Finder

      Hi Stellah,

      Thanks for your question.

      Yes as long as you’re using the EFT for a purchase (not a cash advance) and pay your balance in full within the statement period, the interest free days apply.

      Cheers,
      Shirley

    Cam's avatar
    CamAugust 23, 2014

    i am looking to buy a $4908.81 laptop for my University Course which requires a powerful Laptop, i was wondering what which 0% interest free on purchases credit card i should apply for i plan to pay it off over 9 – 12 month period.

    i’m confused by the 55 day interest free period because i am only using it for this one purchase and plan to cancel the card straight after i’ve payed my purchase off. does this mean i have to pay my entire purchase off by 55 days or do i need to pay a certain amount per month?

      Shirley Liu's headshotFinder
      ShirleyAugust 27, 2014Finder

      Hi Cam,

      Thanks for your question.

      If you have a 0% Purchase Card, the 55 days interest free don’t apply until after your introductory period is over. For example, if you have a card that has 0% for 12 months, then during your first 12 months you don’t pay interest on that purchase (except for minimum repayments).

      After that 12 months is over, then the 55 days interest free days apply, given that you don’t carry a balance from one statement period to the next.

      Hope this helps,
      Shirley

      Cam's avatar
      CamAugust 27, 2014

      Thanks Shirley,

      if i pay the item off well before the 12 months is up that would mean I wont pay for any interest correct?

      i would be able to cancel the card right after paying off the item or do i have to keep the card for 12 months before cancelling the card?

      My plan is to pay at least 1/4 of the laptop off the first payment then pay 100+ a week after than until i pay it off

      Elizabeth Barry's headshotFinder
      ElizabethAugust 28, 2014Finder

      Hi Cam,

      That’s correct. If you make a purchase on a 0% purchase card and pay off your balance before the introductory period is over, you will not incur interest on the purchase you made with the card. You are also able to cancel the card after you finish paying off your remaining balance.

      Thanks,

      Elizabeth

    Nesh001's avatar
    Nesh001June 12, 2014

    Hi,

    according to above example,
    card balance due date = 25th May
    If I pay the balance in full by 20th May & if use the card again ($1000) on 23rd (before 25th card balance due date)
    do I get interest free on $1000 till next card balance due date?

    Thanks

      Shirley Liu's headshotFinder
      ShirleyJune 16, 2014Finder

      Hi Nesh001,

      Thanks for your question.

      Unfortunately you would only have two interest free days because the interest free period is up to 25th May.

      If you would like to get maximum interest free days, you may want to consider making the purchase after the 25th. Please note that interest free days are voided if you hold a balance from one statement period to another, and during a balance transfer.

      The video explains the concept in a more digestible manner.

      Cheers,
      Shirley

    Jas's avatar
    JasOctober 28, 2013

    I am looking at getting a credit card to pay for surgery up $5000. I want to be sure I get the best possible card for this purpose. I would definitely be paying the monthly payment by the due date and I would be hoping to have the total paid off in a year. Can you suggest which card you think would be best?

      Jacob Joseph's avatarFinder
      JacobOctober 29, 2013Finder

      Hi Jas,

      Thanks for your question.

      Please have the introductory purchase rate credit cards. These credit cards have a special interest rate on purchases made on the card for an introductory period. When you’re on this page, you can click the table headings to arrange the cards from lowest to highest interest rates, annual fees, etc., and vice versa. You can also use the checkboxes to the left of the table to compare cards one on one.

      At the end of the introductory period, any unpaid purchases will be charged at the variable annual percentage rate for purchases. You will still be required to make the minimum repayment each month.

      I hope this helps. And let us know if you have any further questions.

      Cheers,
      Jacob

    Kapila's avatar
    KapilaOctober 19, 2013

    Good One….Thanks for the details. How does the HSBC 51 day interest free plan works?

      Jacob Joseph's avatarFinder
      JacobOctober 21, 2013Finder

      Hi Kapila,

      Thanks for your question. HSBC offers up to 55 days interest-free with their credit cards. You can compare HSBC credit cards as well to see what each has to offer.

      You can find out information about these credit cards by reading the card’s review.

      I hope this helps.

      Cheers,
      Jacob

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