How to avoid interest and save on credit card costs.
It may sound too good to be true, but some credit cards come with no interest when you transfer balances or make a purchase. The 0% interest offer is typically a part of a promotion that will last for a limited time, after which it will revert to a higher rate. As there are many interest-free credit card promotions on the market, you can use this guide to compare the different types of no interest products to find the right one for you.
St.George Credit Card Offer
Enjoy 0% p.a introductory rates on balance transfers and purchases combined with a competitive annual fee.
- $0 p.a. annual fee for the first year ($55 p.a. thereafter) annual fee
- 13.24% p.a. on purchases
- 0% p.a. for 14 months on balance transfers
- Cash Advance Rate of 21.49% p.a.
- Up to 55 days interest free
Compare 0% balance transfer & purchase credit cards
What types of no interest credit cards are available?
There are many types of no interest credit cards on the market to suit different types of cardholders. From credit cards with 0% on purchases and balance transfers to cards with low cash advance rates, you can compare the different interest-free options below:
0% purchase rate cards
If you have a big-ticket purchase coming up (such as new furniture) or you know that your spending is due to increase (for example, for Christmas or a birthday), a 0% purchase credit card could help you repay your purchases faster without additional interest costs. 0% purchase rates are usually only in place for a promotional period (which can vary from 3 to 18 months) and will revert to a higher interest rate thereafter. Therefore, you should do your best to repay the entire balance before the introductory offer ends to minimise your total costs.
Compare credit cards with 0% interest rates on purchases
0% balance transfer cards
If you have an existing debt, you could use a no interest balance transfer credit card to repay your balance without collecting interest. Not only will this cut down your interest costs, but it could also help you repay your debt faster. The length of the 0% offer will vary between cards, but some products offer interest-free balance transfers for up to 24 months. As the 0% will revert to a higher purchase or cash advance rate at the end of the introductory period, you should do your best to pay down your entire debt before the standard rate applies.
Low cash advance rate cards
Currently, no credit cards in Australia offer credit cards with 0% interest on cash advances. These transactions usually collect the highest interest rate on the card (between 20% and 22%), but there are some credit cards that offer a lower ongoing cash advance rate. These cards are suited to cardholders who regularly use their credit card to withdraw cash from an ATM or make other cash-equivalent transactions.
Comparison of cash advance credit cards
Rates last updated June 25th, 2017.
- ME frank Credit Card
Interest rate changed from 9.99% p.a. to 11.99% p.a. on purchases, balance transfers and cash advanc
September 19th, 2016
- Bank Australia No Annual Fee Visa Credit Card
Updated product name from Bank Australia Visa Creditto Bank Australia No Annual Fee Visa Credit Card
January 13th, 2017
Interest-free days offers
Although this isn’t a type of card, it is a feature offered on a number of cards that allows you to make purchases without paying interest on them for up to a specific number of days. This offer is usually only available to cardholders who make their monthly payments in full. The number of interest-free days will vary from card to card, but they're usually between 44 and 55 days. You can compare credit cards that offer interest-free days here.
Comparison of credit cards with up to 55 interest-free days
How can I compare no interest credit cards?
If you’re unsure which card is for you, considering some of the below factors could help you determine which card is of most value to you:
- Length of promotional offer. If you're applying for a card with 0% on purchases or balance transfers, make sure you check the length of the promotional offer. This will help you determine how much you'll need to repay each month to clear the entire balance before the higher revert rate applies. If you have a large debt, you might want to opt for a card with a longer introductory offer.
- Revert rate. As the 0% interest rate will revert to a higher rate at the end of the promotional period, it’s important to compare these to ensure that the amount you’ll be paying won’t counteract any savings you would’ve made during the introductory period.
- Annual fee. These cards often come with annual fees. You should make sure that the interest savings you receive outweigh this cost to get value out of the card.
- Rewards program. Some of these cards come with rewards programs, allowing you to earn points for every $1 spent. You should pay attention to the earn rates and how you can redeem the rewards to determine whether it will be of value to you. If you're using a card for a 0% balance transfer offer, rewards may be less valuable as you shouldn't be using the card to make regular purchases while you're concentrating on repaying your debt.
- Complimentary insurance. Complimentary insurances for travel or purchases are another bonus that could help add extra value to your card.
What are the pros and cons of no interest credit cards?
- Save money. The most obvious perk of a no interest credit card is that you can save on interest costs while the promotion is in place.
- Consolidate your debt. If you use a 0% balance transfer credit card, you could repay your debt faster and save hundreds or thousands on interest.
- Make larger purchases. If your card has no interest on purchases, this can give you the flexibility to make larger purchases with more time to pay it off without collecting interest.
- Revert rate. At the end of the introductory period, the no interest offer will return to a higher rate.
- Repaying multiple balances. If you’re carrying multiple types of balances, the interest-free offer may not apply to the balance you want. For example, 0% on interest may apply to purchases but might not apply to cash advances.
- Temptation to spend. For some shoppers, the no interest on purchases may be used as an excuse to overspend. Remember that you have to repay everything you charge and that a higher interest rate will apply once the promotion ends.
- High annual fees. You might find that you are paying higher annual fees to make up for the 0% interest benefit on the credit card. Make sure that these costs don't outweigh your interest savings to get full value from the card.
How to apply for a no interest credit card
What is the eligibility criteria?
The eligibility requirements will vary from card to card, but here are some of the conditions you can expect during the application process.
- Age. You'll need to be 18 years old or older to apply.
- Residential status. Most Australian credit cards require cardholders to be permanent Australian residents or citizens. You can compare credit cards that accept temporary residents here.
- Annual income. You may need to meet a minimum income requirement to apply.
What documents will I need to provide?
You’ll also be required to provide certain information during your application, so make sure to have the following handy:
- Verifying your identity. To confirm your identity, the bank may ask for you to provide evidence such as your driver’s licence, passport or Medicare card.
- Employment verification. You be asked to provide evidence of your income, including pay slips, tax documents and your employer’s contact details.
Frequently asked questions
Will I have to make monthly payments during the no interest promotional period?
Yes, you will still receive statements and be required to make minimum monthly payments. In some cases, the no interest offer may be rendered void if you miss a payment.
If you want to minimise your interest costs, it's wise to pay more than the minimum repayment each month to clear out the majority (if not all) of the balance before the revert rate applies.
What happens if I am unable to pay the balance before the promotional period ends?
Any leftover unpaid balance will be charged at the revert rate described in the Product Disclosure Statement. This is usually either the standard purchase rate or cash advance rate. To avoid any nasty surprises, make sure to read over these before applying.