Cut your credit card costs and kickstart your savings with a no interest credit card.
It may sound too good to be true, but there are credit cards out there that offer no interest when you transfer balances, take out cash or make a purchase. This is typically a part of a promotion that will last for a limited time, after which it will revert to a higher rate. Before jumping on board with one of these credit cards, you’ll need to compare your options to find the right one for you.
Comparison of 0% balance transfer & purchase Credit Cards
What types of no interest credit cards are available?
No interest credit cards come in many forms, with different terms to think about. It’s important that when comparing these types of offers, you understand those terms explicitly and pick the card that offers the greatest value for your lifestyle.
0% purchase rate cards
For the Australian who wants a credit card for large expenses, a zero interest on purchases card could be beneficial. If you choose one with long enough terms, you can buy that big screen TV and pay it off as if paid with cash before the promotional period ends. With this type of card, the interest rate will revert back to the standard purchase rate that the card usually offers.
Compare credit cards with 0% interest rates on purchases
0% balance transfer cards
If you have an existing debt, a no interest balance transfer credit card could be a good way to consolidate it. Cardholders generally need to apply for the transfer at the time of application, so make sure you have the details of the balance handy. These cards typically work better if you use them sparingly and repay the balance during the promotional period, as a revert interest rate will kick in at the end of the introductory offer. This rate usually reverts to the one used for either purchases or cash advances, so you’ll want to confirm and compare these details before applying.
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 other cash-equivalent transactions.
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, so that’s something you’ll need to strive towards to take advantage of such an offer. 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 does a no interest credit card work?
As the name implies, a no interest credit card don’t charge interest on specific services on the card. This could be on balances transferred, cash advances or purchases made with the card. Credit card companies will usually make this offer for a limited time, and for a promotional period that could last anywhere from 5 to 18 months. Since you will only be enjoying the no interest period for a set time, it’s important to look at the rate it will revert to once the offer ends.
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. This is particularly relevant for no interest balance transfer cards. If you don’t think you can realistically repay your balance during the introductory period, you could end up paying more if you have to pay for the bulk of it at the much higher revert rate.
- Annual fee. If the annual cost of the card isn’t outweighed by the savings and rewards you receive from the card, then it probably isn’t of value to you.
- Rewards program. Some of these cards come with rewards programs, so you’ll want to pay attention to the earn rates and how you can earn and redeem your points to determine whether the card will be beneficial.
- Complimentary insurance. Complimentary insurances for travel or purchases are another bonus that could set your options apart.
- Revert rate. As the relevant 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.
What else should I consider when comparing no interest credit cards?
No interest credit cards are an enticing offer, but to get the most advantage from them you should consider the following:
- Spending habits. Try to only spend, withdraw or transfer a balance that you know you can pay off before the promotional period ends.
- Is it compatible with your financial situation? If you typically don’t need extra cash to make it between paychecks, then a no interest on cash advances card will not be useful for you.
- Terms and conditions. If you are trying to consolidate your debt, you’ll want a card where the no interest period for balance transfers allows you enough time to pay it off.
- The credit limit. Make sure that the minimum credit limit is both feasible and of value to you.
- Other features. Not having to pay interest should not overshadow other important features such as the revert rates, rates on other services, fees and the type of card.
What are the pros and cons of no interest credit cards?
- Save money. You can save money by avoiding interest accruing.
- Consolidate your debt. Pay down your debt faster and with fewer interest costs by using an interest-free balance transfer offer.
- Make larger purchases. If you have a no interest on purchases card you can make a large purchase and pay as if with cash.
- Multiple benefits. Some cards offer 0% interest on more than one feature, such as balance transfers and purchases, which can further increase your potential savings.
- 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 balance you want.
- Temptation to spend. For some shoppers, the no interest on purchases may be used as an excuse to overspend.
- 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.
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.
- Income. Your income will help determine how much of a credit limit the bank offers to you. Some issuers will state a minimum income that you must meet to receive approval.
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.
No interest credit cards offer you a way to save money on interest payments for a limited time. To receive maximum benefit, you’ll need to compare your options by considering the relevant features and terms and conditions.Back to top
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 monthly payments. In some cases, the no interest offer may be rendered void if you miss a payment.
What will my monthly payments be?
These will vary from card to card and will also depend on your balance, so make sure to compare these details before applying.
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. To avoid any nasty surprises, make sure to read over these before applying.