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How to avoid credit card interest by paying the full balance

Say goodbye to paying interest on your credit card when you pay your balance in full each month.

Almost all credit cards feature up to a certain number of interest-free days when you pay your closing balance in full by the statement due date. This gives you a way to avoid paying interest on new purchases while still enjoying the convenience, and often rewards, of a credit card. Read this guide to find out how this feature works and other factors to consider when you want to avoid interest charges.

Comparison of 55 days interest-free credit cards

Data indicated here is updated regularly
Name Product Purchase rate (p.a.) Balance transfer rate Annual fee
HSBC Platinum Credit Card - Balance Transfer Offer
19.99% p.a.
0% p.a. for 22 months
$129 p.a.
Save with a 22-month balance transfer offer. Plus, lounge passes, travel insurance and an annual fee refund when you spend an eligible $6k/year.
St.George Vertigo Classic
13.99% p.a.
0% p.a. for 18 months
$55 p.a.
Get 0% p.a. on balance transfers for up to 18 months with no balance transfer fee. Plus, a low annual fee and purchase rate.
Qantas Premier Platinum
19.99% p.a.
0% p.a. for 18 months
$199 p.a. annual fee for the first year ($299 p.a. thereafter)
Get up to 80,000 bonus Qantas Points, 75 bonus Status Credits, a discounted first-year annual fee and a 0% p.a. balance transfer rate for 18 months.
ANZ Low Rate
12.49% p.a.
0% p.a. for 22 months with 1.5% balance transfer fee
$0 p.a. annual fee for the first year ($58 p.a. thereafter)
Save with 0% p.a on balance transfers for 22 months (with a 1.5% BT fee) and $0 first year annual fee. Plus a 12.49% p.a. purchase interest rate.
Virgin No Annual Fee Credit Card - Purchase Offer
0% for 9 months, reverts to 18.99% p.a.
0% p.a. for 9 months
$0 p.a.
Offers an introductory 0% p.a. for 9 months on purchases and balance transfers (with no BT fee) for an ongoing $0 annual fee.
Citi Rewards Card
21.49% p.a.
0% p.a. for 26 months with 1.5% balance transfer fee
$0 p.a. annual fee for the first year ($199 p.a. thereafter)
Save with 0% interest on balance transfers for the first 26 months (with a 1.5% BT fee) and a $0 annual fee for the first year.
Bendigo Bank Low Rate Mastercard
0% for 15 months, reverts to 11.99% p.a.
11.99% p.a.
$45 p.a.
Enjoy a 0% p.a. interest rate on purchases for the first 15 months and a $150 Woolworths gift card when you spend $3,000 in the first 90 days.
St.George Vertigo Platinum
0% for 15 months, reverts to 12.99% p.a.
6.99% p.a. for 12 months
$49 p.a. annual fee for the first year ($99 p.a. thereafter)
Features an introductory 0% p.a. purchase rate, $49 first year annual fee and complimentary travel insurance covers.
Westpac Low Rate Card
Finder Award
Westpac Low Rate Card
13.74% p.a.
0% p.a. for 16 months
$59 p.a.
A no frills, low rate card offering 0% p.a. interest on balance transfers for the first 16 months, with no balance transfer fee.
Bank of Melbourne Vertigo Classic
13.99% p.a.
0% p.a. for 18 months
$55 p.a.
Enjoy 0% p.a. interest for up to 18 months on balance transfers. Plus, a low annual fee and competitive purchase rate.
St.George Amplify Platinum
19.74% p.a.
0% p.a. for 6 months
$49 p.a. annual fee for the first year ($99 p.a. thereafter)
Up to 100,000 bonus Amplify Points (70k in the first year & 30k in the second year) when you spend $6k/year for the first 2 years.
Bankwest Zero Platinum Mastercard
17.99% p.a.
2.99% p.a. for 9 months
$0 p.a.
Offers a $0 annual fee, 0% foreign transaction fees, complimentary international travel insurance and a balance transfer offer.
Bank of Melbourne Amplify Signature
19.74% p.a.
0% p.a. for 6 months
$139 p.a. annual fee for the first year ($279 p.a. thereafter)
Up to 200,000 bonus Amplify Points (130k in the first year & 70k in the second year) when you spend $12k/year for the first 2 years.
BankSA Vertigo
13.99% p.a.
0% p.a. for 18 months
$55 p.a.
Enjoy a 0% p.a. interest rate for up to 18 months on balance transfers. Plus, a low annual fee and purchase interest rate.
St.George Rainbow Vertigo Platinum
0% for 15 months, reverts to 12.99% p.a.
6.99% p.a. for 12 months
$49 p.a. annual fee for the first year ($99 p.a. thereafter)
All the platinum features of the Vertigo Platinum Visa with a rainbow design in support of the LGBT community.
BankSA Amplify Platinum - Qantas
19.74% p.a.
0% p.a. for 6 months
$99 p.a.
Receive 60,000 bonus Qantas Points when you spend $2,000 within 90 days and earn up to 0.5 Qantas Points per $1 spent.
BankSA No Annual Fee
20.74% p.a.
0% p.a. for 12 months with 1% balance transfer fee
$0 p.a.
Offers 0% p.a. on balance transfers for 12 months, up to 55 days interest-free on purchases and an ongoing $0 annual fee.
St.George No Annual Fee
20.74% p.a.
0% p.a. for 12 months with 1% balance transfer fee
$0 p.a.
Receive up to 55 days interest-free on purchases, a low minimum credit limit of $500 and a long-term balance transfer offer.
Bank of Melbourne Amplify Card
19.74% p.a.
$79 p.a.
Earn your choice of uncapped Amplify or Qantas Points, plus enjoy up to 55 days interest-free on purchases.
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Why should I pay by balance in full each month?

Credit cards are designed to work as a short-term cash flow solution. You can avoid paying anything extra (other than the product’s annual fee, if it has one) when you pay the full balance by the due date and only use your credit card to make purchases. Up to 55 days is the standard interest-free period for credit cards, although some may offer a longer or shorter interest-free period. If you have a credit card with up to 62 days interest-free, you have 2 months to pay back the balance without incurring additional interest charges. Note that to get access to this feature, you must not carry a balance from the previous statement period.

What does up to 55 days interest-free really mean?

How much will I have to pay each month?

The minimum repayment is what you must pay back each month, and this usually ranges from 2-3% of the total account balance. If you don’t pay this amount, your credit card provider may charge a late payment fee. But if you only pay the minimum amount, you will be charged interest on the balance of your account. To avoid interest, you can pay the full amount owing, which will vary based on how many purchases you have made on the card during the statement cycle.

For example, let’s say you spent $2,000 on a credit card with a minimum payment of 3%. The minimum you would have to pay off your statement would be $60. If you wanted to avoid interest charges, you would have to pay the full $2,000 off the account by the due date on the statement. It is recommended that you pay as much of your outstanding balance as you can each month. It can take years to clear your balance by only paying the minimum amount and in some cases you may never be able to pay off your card.

How much could I save in interest by paying my balance in full?

credit card statement up close Michelle has a Westpac Low Rate Card with an outstanding balance of $3,000. The debt accrues interest at the purchase rate, which is 13.74% p.a., and she must repay 2% every month. If she doesn’t make the minimum repayment, Westpac charges a late payment fee of $15.

  • Minimum repayment only. If Michelle only pays the minimum amount each month, it will take her 16 years and 4 months to pay off the balance. It will also cost her $2,980 in interest.
  • Paying more than the minimum. If Michelle increases her payments to $100 each month, she will save $2,351 in interest repayments. She will also pay off the debt in 3 years and 1 month, or 13 years earlier than if she only made minimum payments.

Here are tips for paying your credit card balance in full

  • Set up an autopay. An automated payment from your transaction account to your credit card allows you to pay the minimum amount due, a partial amount or the whole balance every month. To set up this payment option complete and return an automatic payment plan form to your credit card provider, including details of your chosen transaction account and the amount you want to be directly debited each month. You can also set up autopay by calling your financial institution.
  • Change your statement date. It is possible to change when you’re billed by the bank so that it lines up with when you’re paid. For example, if you’re paid monthly on the first of the month, you could request to have your statement due date fall then or a week later so that you will have funds ready to pay it off. You can change your statement issue date and minimum repayment due date by calling your financial institution.
  • Set calendar reminders. Set up reminders using your phone or computer so you never miss a payment due date. A calendar on the fridge can be a good reminder too.
  • Create a budget. You can create a budget to find out where you can cut back on expenses in order to pay your card balance in full each month. A budget lets you see how much you have coming in and how much is going out, as well as where it all goes.
  • Use a savings account. Open a savings account just for the money you plan to use on credit card repayments. A savings account will cost you nothing and you can get rewarded with bonus interest when you make regular deposits.

How to pay your credit card bill on time

If you have credit card debt you’re struggling to pay down, a balance transfer can also save you money on interest repayments. A balance transfer promotion gives you a special interest rate for a limited period of time. You can use the promotional period to pay off as much of your credit card balance as you can before the promotional interest rate reverts to the purchase or cash advance rate of interest. But if you don’t have existing credit card debt, paying the balance in full by the due date will help you avoid extra charges so that the card you choose works for you.

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6 Responses

  1. Default Gravatar
    SallyApril 29, 2016

    I’m still confused about paying the full balance. If I have 62 days interest free (Coles Low Rate card) if I pay the full balance off, don’t I technically only have a month, as I have to pay the whole amount by the time the bill is due? How would I truly get 62 days interest free?

    • Avatarfinder Customer Care
      DeeMay 3, 2016Staff

      Hi Sally,

      Thanks for your comment.

      To better understand the concept of interest-free days, I would like to refer you to this page. It contains a video and a graphic presentation that discuss interest-free days in full details.

      Cheers,
      Anndy

  2. Default Gravatar
    KathyJune 25, 2013

    Which credit card is best with lowest annual fee, qantas frequent flyer points and travel insurance and extended warranty if i pay off every month?

    • Avatarfinder Customer Care
      JacobJune 25, 2013Staff

      Hi Kathy. Please have a look at our frequent flyer comparison page. You can sort the cards by their annual fee, rewards per dollar spent and by whether they have a balance transfer promotion. Most of these cards offer complimentary international travel insurance; however, please check the product table on the review page to see whether this benefit is included with the credit card. If you have any questions about the cards on this page, please ask us. Thanks for your question. Jacob.

  3. Default Gravatar
    VickApril 26, 2013

    Hi my commonwealth card is cancelled by my bank because I was over seas and didn’t pay repayments. I also lost my job on that time but now I’m ready to pay all instalments. Is there any way they can issue me credit card again or will it effect on me in future?

    • Avatarfinder Customer Care
      JacobApril 26, 2013Staff

      Hi Vick. Thanks for your question. You will need to discuss your options with a lender. You may also want to get a copy of your credit file. It’s not the case that when you’re ready to make repayments you can reapply for a card, the fact that you defaulted in the past is going to have a negative impact on your chances of getting another credit card. Jacob.

Credit Cards Comparison

Data indicated here is updated regularly
Name Product Purchase rate (p.a.) Balance transfer rate Annual fee
HSBC Platinum Credit Card - Balance Transfer Offer
19.99% p.a.
0% p.a. for 22 months
$129 p.a.
Save with a 22-month balance transfer offer. Plus, lounge passes, travel insurance and an annual fee refund when you spend an eligible $6k/year.
ANZ Low Rate
12.49% p.a.
0% p.a. for 22 months with 1.5% balance transfer fee
$0 p.a. annual fee for the first year ($58 p.a. thereafter)
Save with 0% p.a on balance transfers for 22 months (with a 1.5% BT fee) and $0 first year annual fee. Plus a 12.49% p.a. purchase interest rate.
Bankwest Zero Platinum Mastercard
17.99% p.a.
2.99% p.a. for 9 months
$0 p.a.
Offers a $0 annual fee, 0% foreign transaction fees, complimentary international travel insurance and a balance transfer offer.
ANZ Frequent Flyer Black
20.24% p.a.
20.24% p.a.
$425 p.a.
Earn 100,000 bonus Qantas Points, 75 bonus Status Credits and $150 back when you spend $3,000 in the first 3 months with this premium card.
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* The credit card offers compared on this page are chosen from a range of credit cards finder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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