Save with balance transfers, 0% deals & platinum perks exclusive to finder
Compare cards

How your credit card interest-free period works

Learn exactly how your credit card interest-free period works to avoid paying any interest.

Credit card interest, statement cycles and billing periods can be confusing concepts. As a result, people may unknowingly incur interest fees which could then lead to serious debt. One way to avoid these charges is to take advantage of the interest-free days offered by many credit cards. Use this guide to understand how the interest-free period works and how you can use your credit card to manage your cash flow without accruing debt.

When does the interest-free period start?

Your interest-free period begins on the first day of your credit card statement cycle and ends on the payment due date for that statement. For example, if your card offers an interest-free period of 55 days and your billing or statement cycle begins on 1 April, you will get 55 days for purchases made on that day, 54 days for purchases on 2 April and so on. This means that at the end of April (which is a 30-day month) you will have 25 interest-free days left to pay for your eligible transactions. The due date for your statement would be 25 May in this scenario. So if you have a purchase in mind and want to take full advantage of the interest-free days, try to make the purchase as early in the statement period as possible.

How can I use interest-free days on my credit card?

It is crucial that you fulfill these two key requirements in order to enjoy your interest-free period:

  • Pay your statement in full. You must clear your entire credit card balance by the payment due date on each statement to be eligible for this interest-free period. Once you have an outstanding balance, the interest-free period no longer applies, and interest will accrue each day on all your transactions.
  • Make eligible purchases. Your interest-free period applies to purchase transactions, but excludes balance transfers, cash advances, and most utility payments and government charges. Interest accrues on those types of transactions from the moment they take place.

Case Study

karen-case-study

Here’s an example of how someone can take full advantage of their interest-free period. Karen’s credit card offers her 44 interest-free days, and her billing cycle starts each month on the 5th. Karen diligently pays off her full account balance every statement cycle, and enjoys the interest-free period because of this.

On 5 September, Karen bought a new computer for $2,000 – a purchase which would be eligible for the full 44 interest-free days (until the statement due date on 19 October). On 30 September, her car breaks down and Karen charges the purchase of parts to her card for $3,000. This purchase will only get 19 interest-free days. This means Karen will have to pay her card balance of $5,000 before 19 October in order to enjoy her interest-free period for September.

interest-free-days-cc-diagram

Compare up to 55 days interest-free credit cards

Rates last updated July 27th, 2017
Name Product Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee Product Description
ANZ Platinum Credit Card - Exclusive Offer
0% p.a. for 3 months (reverts to 19.74% p.a.)
0% p.a. for 12 months
$0 p.a. annual fee for the first year ($87 p.a. thereafter)
Exclusive to finder, receive 0% p.a. interest on purchases for 3 months and 0% p.a. on balance transfers for 12 months.
HSBC Platinum Credit Card
19.99% p.a.
0% p.a. for 22 months with 2% balance transfer fee
$99 p.a.
Earn reward points with high credit limits, prestige services including a personal concierge service.
ANZ Frequent Flyer Black
19.99% p.a.
$0 p.a. annual fee for the first year ($425 p.a. thereafter)
Receive 75,000 bonus Qantas Points when you apply online, are approved and spend $2,500 on eligible purchases in the first 3 months.
ANZ Rewards Platinum
18.79% p.a.
$0 p.a. annual fee for the first year ($95 p.a. thereafter)
Receive 50,000 bonus Reward Points when you spend $2,500 within the first 3 months from card approval.
American Express Essential®  Credit Card
14.99% p.a.
0% p.a. for 12 months with 1% balance transfer fee
$0 p.a.
Receive a $50 credit when you apply online, are approved and spend $750 on your new card within the first 3 months of card membership.
BankSA Vertigo Visa
13.24% p.a.
0% p.a. for 18 months
$0 p.a. annual fee for the first year ($55 p.a. thereafter)
Get up to 55 days interest-free on purchases and be protected by 24/7 Falcon® Fraud service.
HSBC Platinum Qantas Credit Card
19.99% p.a.
$199 p.a.
Receive 60,000 bonus Qantas Points when you meet the spend requirement and earn up to 1 Qantas Point per $1 spent.
Bank of Melbourne Vertigo Platinum
12.74% p.a.
0% p.a. for 20 months
$99 p.a.
Get a range of complimentary insurance covers, access to a 24/7 concierge and up to 55 days interest-free on purchases.
ANZ Frequent Flyer Platinum
19.99% p.a.
$0 p.a. annual fee for the first year ($295 p.a. thereafter)
Get 50,000 bonus Qantas Points when you apply online, are approved and spend $2,500 on eligible purchases within the first 3 months.
ANZ First Student Card
19.74% p.a.
$0 p.a. annual fee for the first year ($30 p.a. thereafter)
An ideal credit card for students with up to 44 days interest-free on purchases. Access your account on the go with the goMoney™ app.
Virgin Australia Velocity Flyer Card - 0% Interest Offer
0% p.a. for 12 months (reverts to 20.74% p.a.)
0% p.a. for 6 months
$129 p.a.
Save with 0% p.a. on purchases for 12 months. Plus, up to 0.66 Velocity Points per $1 spent.
Citi Clear Platinum
14.99% p.a.
$99 p.a.
Save with 14.99% p.a. on retail purchases. Also enjoy free wine when you dine with the Citibank Dining Program.
ANZ Rewards Credit Card
18.79% p.a.
$0 p.a. annual fee for the first year ($80 p.a. thereafter)
Receive 25,000 bonus Reward Points when you spend $2,500 on eligible purchases in the first 3 months from approval.
NAB Low Fee Card
19.74% p.a.
0% p.a. for 16 months with 2% balance transfer fee
$30 p.a.
Receive complimentary purchase protection insurance, special offers from Visa Entertainment and up to 44 days interest-free on purchases.
American Express Platinum Business Card
$1,500 p.a.
Enjoy a platinum business concierge, complimentary Virgin Lounge access, worldwide travel insurance and luxury hotel benefits.
ANZ Low Rate Platinum
11.49% p.a.
0% p.a. for 16 months with 2% balance transfer fee
$99 p.a.
Enjoy platinum benefits with exclusive discounts, complimentary travel and purchase insurances and a 24/7 personal concierge.
American Express Gold Business Card
$169 p.a.
Take advantage of no pre-set spending limit, data that feeds to MYOB accounting software and up to 51 days interest-free on purchases.
American Express Platinum Card
$1,200 p.a.
Receive an annual $300 Platinum Travel Credit, membership to an elite tier of partner programs and access to more than 1,000 VIP lounges.
ANZ Rewards Travel Adventures card
20.24% p.a.
$225 p.a.
Receive 40,000 bonus Velocity Points when you spend $500 on eligible purchases in the first three months.
NAB flybuys Rewards Card
19.99% p.a.
0% p.a. for 6 months
$95 p.a.
Earn 1 flybuys point per $1 spent on everyday purchases and receive 7 complimentary insurance covers.

Compare up to 4 providers

Compare up to 44 day interest-free credit cards

Rates last updated July 27th, 2017
Name Product Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee Product Description
Qantas American Express Discovery Card
20.74% p.a.
0% p.a. for 12 months with 1% balance transfer fee
$0 p.a.
Save by not having to pay annual fees, and earn Qantas Frequent Flyer points at the rate of 1 point per dollar spent on eligible purchases.
Virgin Australia Velocity Flyer Card - 0% Interest Offer
0% p.a. for 12 months (reverts to 20.74% p.a.)
0% p.a. for 6 months
$129 p.a.
Save with 0% p.a. on purchases for 12 months. Plus, up to 0.66 Velocity Points per $1 spent.
Virgin Australia Velocity High Flyer Card - 30k Bonus Points offer
20.74% p.a.
1.9% p.a. for 15 months
$144 p.a. annual fee for the first year ($289 p.a. thereafter)
Take off sooner with up to 1 Velocity Point per $1 spent and earn up to 30,000 bonus Velocity Points. Plus, complimentary travel insurance.
Virgin Australia Velocity Flyer Card - Exclusive Offer
20.74% p.a.
0% p.a. for 18 months
$64 p.a. annual fee for the first year ($129 p.a. thereafter)
Apply by 31 July 2017 to receive a long-term, no fee balance transfer and a $129 Virgin Australia Gift Voucher each year.
NAB flybuys Rewards Card
19.99% p.a.
0% p.a. for 6 months
$95 p.a.
Earn 1 flybuys point per $1 spent on everyday purchases and receive 7 complimentary insurance covers.
NAB Qantas Rewards Card
19.99% p.a.
0% p.a. for 6 months
$95 p.a.
A dual Amex and Visa card that allows you to earn up to 0.75 Qantas Points per $1 spent, plus complimentary purchase protection insurance.
NAB Velocity Rewards Premium Card
19.99% p.a.
0% p.a. for 6 months
$150 p.a.
Offers up to 1 Velocity point per $1 on purchases, combined with complimentary insurance covers and a concierge service.
NAB Velocity Rewards Card
19.99% p.a.
0% p.a. for 6 months
$95 p.a.
This dual Amex and Visa card offers up to 0.75 Velocity Points per $1 spent on eligible purchases and special Visa Entertainment offers.
NAB Qantas Rewards Premium Card
19.99% p.a.
0% p.a. for 6 months
$250 p.a.
A dual Amex and Visa card that earns up to 1 Qantas Point per $1 spent on eligible purchases, plus a 24/7 personal concierge.
NAB Low Fee Card
19.74% p.a.
0% p.a. for 16 months with 2% balance transfer fee
$30 p.a.
Receive complimentary purchase protection insurance, special offers from Visa Entertainment and up to 44 days interest-free on purchases.
Qantas American Express Premium Card
20.74% p.a.
0% p.a. for 12 months with 1% balance transfer fee
$249 p.a.
Enjoy two complimentary Qantas Club lounge invitations per year, plus the protection of complimentary travel and purchase insurance.
Bankwest Qantas Platinum Mastercard
20.49% p.a.
2.99% p.a. for 9 months
$160 p.a.
Enjoy a high credit limit with complimentary travel insurances and earn 0.5 Qantas Points per $1 spent on eligible purchases.
ANZ First Student Card
19.74% p.a.
$0 p.a. annual fee for the first year ($30 p.a. thereafter)
An ideal credit card for students with up to 44 days interest-free on purchases. Access your account on the go with the goMoney™ app.
Bankwest More World Mastercard
19.99% p.a.
0% p.a. for 6 months with 1% balance transfer fee
$270 p.a.
Earn 2.5 More Rewards Points per $1 spent and receive complimentary travel insurance.
Bankwest Qantas World Mastercard
20.49% p.a.
2.99% p.a. for 9 months
$270 p.a.
Earn uncapped Qantas Points per $1 spent on eligible purchases. Also enjoy no foreign transaction fees on online and overseas spend.
ANZ First Visa Credit Card
19.74% p.a.
0% p.a. for 16 months with 2% balance transfer fee
$30 p.a.
Get up to 44 interest-free days on purchases and take advantage of a low minimum credit limit.
NAB Rewards Classic Card
19.99% p.a.
0% p.a. for 6 months
$95 p.a.
Earn 0.75 NAB Rewards Points per $1 spent and receive complimentary purchase protection insurance.
NAB Rewards Platinum Card
19.99% p.a.
0% p.a. for 6 months
$195 p.a.
Collect 50,000 bonus points when you spend $2,500 on everyday purchases within 60 days of account opening.
Bendigo Bank Basic Black Credit Card
12.24% p.a.
$45 p.a.
A no-frills card that allows you to receive up to 44 interest-free days on purchases and add an additional cardholder for $0.
Virgin Money Low Rate Credit Card
11.99% p.a.
0% p.a. for 12 months
$99 p.a.
Receive up to 44 days interest-free on purchases and the optional insurance coverage of CreditShield Edge.

Compare up to 4 providers

What happens if I carry a balance?

Unfortunately the short answer is that you may have to pay interest through the nose. Carrying a balance not only affects the interest-free period for that statement cycle, it also affects the next one because the next cycle will inevitably start with an outstanding balance on your card. This means that until you clear the full balance on your next statement cycle, you will not be eligible for interest-free days, and interest will be charged immediately from the transaction date of every purchase you make.

Important: Note that this situation also applies if you transfer a balance to your new credit card. As long as there’s an outstanding balance on your card, you will not enjoy the advertised interest-free period.

Learn what happens when you carry a credit card balance

Other types of interest-free periods

As well as the interest-free period on purchase transactions, there are some other interest-free offers you may find on your credit card:

  • Promotional 0% purchase rate offers. This type of deal provides you with a 0% interest rate on purchases for the first 3-12 months. After that, the standard variable rate of interest will apply to purchases (unless you take advantage of interest-free days).
  • Promotional 0% balance transfer offers. A balance transfer credit card promotion could offer an interest-free introductory period for between 3 and 24 months. While this means you can enjoy paying 0% interest on your transferred balance for that stipulated period of time, you may have to pay a balance transfer fee initially, and you’ll still have to make minimum repayments on your balance each month. Other fees may apply (e.g. annual fee, late fee, etc.) and, as explained earlier, you will not enjoy the interest-free period on purchase transactions until you’ve paid your balance in full.
  • Interest-free payment plans. Some credit cards provide interest-free options for selected purchases. Examples of some of these are the Gem Visa, Myer Visa and the David Jones American Express credit cards.

Tips for using the interest-free period

Consider the following tips if you want to take advantage of interest-free days on your credit card:

  • Plan your purchases. Interest-free periods may vary from 14 to as long as 62 days. Whatever the case, it’s a good idea to make larger purchases at the beginning of a billing cycle so that you’re getting the greatest number of interest-free days.
  • Look at your statement regularly. Stay on top of your credit card bill by checking your online statement regularly. This will help you plan your repayments and better manage cash flow.
  • Prioritise repayments over purchases. If you have an outstanding balance, focus on paying it off in full before making any new purchases. This strategy will help reduce the amount of interest you incur and help you meet the requirements for interest-free days in future billing cycles.
  • Only buy what you can afford. As you’ll need to pay off your balance in full each month, it’s important to only use your card for expenses you can afford to repay by the statement due date.
  • Set a budget. Creating a budget for your credit card expenses and repayments will help ensure that you can settle your monthly balances and continue to take advantage of the interest-free period on your card.

Armed with this knowledge of how your credit card interest-free period works, you can now plan your purchases and repayments to make the most use of those interest-free days. Always remember the bottom line though: pay your balance in full!

Back to top
Was this content helpful to you? No  Yes

Related Posts

American Express Velocity Platinum Card
American Express Velocity Platinum Card

Interest rate

20.74

Annual fee

375
ANZ Platinum Credit Card - Exclusive Offer
ANZ Platinum Credit Card - Exclusive Offer

Interest rate

19.74

Annual fee

87
St.George Vertigo Platinum
St.George Vertigo Platinum

Interest rate

12.74

Annual fee

99

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, read the PDS or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.
Ask a question
feedback