How to avoid credit card interest by paying the full balance

Information verified correct on January 24th, 2017

Say goodbye to paying interest on credit card purchases 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 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

Rates last updated January 24th, 2017.

Citi Rewards Credit Card - Classic Card

BT period changed from 12 to 15 months plus new offer of $50 cash back, valid until 30 June 2017.

January 13th, 2017

Citi Simplicity Card

0% p.a. for 9 months has been updated to 15 mos. on balance transfers. Offer ends 30 June 2017.

January 13th, 2017

ANZ Platinum Credit Card

Balance transfer period changed from 18 months to 16 months.

January 18th, 2017

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Jonathan Choi Jonathan
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
American Express Essential Credit Card
Receive a $50 credit on eligible spend and get Smartphone screen insurance combined with a no annual fee for life card. Also enjoy a 0% p.a. balance transfer rate for 12 months.
14.99% p.a. 0% p.a. for 12 months with 1% balance transfer fee $0 p.a. Go to site More info
HSBC Platinum Qantas Credit Card
Receive 60,000 bonus Qantas Points on eligible spend within 3 months. Enjoy access to premium benefits and complimentary insurance.
19.99% p.a. $199 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info
ANZ Platinum Credit Card - Exclusive Offer
Receive a low introductory offer of 0% p.a. on purchases for 3 months and 0% p.a. on balance transfers for 12 months. Also, enjoy an annual fee waiver in the first year.
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) Go to site More info
Westpac Low Rate Card - Balance Transfer Offer
A simple low interest rate card featuring a low ongoing rate on purchases and 0% p.a. for 24 months on balance transfers.
13.49% p.a. 0% p.a. for 24 months with 2% balance transfer fee $59 p.a. Go to site More info
Citi Clear Platinum Card
A platinum credit card with a low interest rate on purchases, a competitive annual fee plus Visa Platinum privileges.
14.99% p.a. $99 p.a. Go to site More info
ANZ Low Rate
$100 Back plus 0% p.a. for the first 6 months on purchases from approval.
0% p.a. for 6 months (reverts to 13.49% p.a.) $58 p.a. Go to site More info
American Express Platinum Edge Credit Card
Receive 10,000 Membership Rewards Bonus Points when you meet the minimum spend requirement. Enjoy a $200 travel credit every year and get 0% p.a. for 12 months on balance transfers.
20.74% p.a. 0% p.a. for 12 months with 1% balance transfer fee $195 p.a. Go to site More info
Bankwest Breeze MasterCard
Enjoy an introductory rate of 0% p.a. on balance transfers for 21 months (2% balance transfer fee applies). Limited time only.
12.99% p.a. 0% p.a. for 21 months with 2% balance transfer fee $59 p.a. Go to site More info
ANZ Low Rate Platinum Credit Card
$250 Back plus 0% p.a. for the first 6 months on purchases from approval.
0% p.a. for 6 months (reverts to 13.49% p.a.) $99 p.a. Go to site More info
Bankwest Breeze Platinum MasterCard
A Platinum card offer with a 0% p.a. for 21 months on balance transfers and $0 on foreign transactions. Limited time only.
12.99% p.a. 0% p.a. for 21 months with 2% balance transfer fee $99 p.a. Go to site More info
American Express Explorer Credit Card
Receive 100,000 Membership Rewards Bonus Points on eligible spend within the first 2 months of Card Membership. Also enjoy a $400 travel voucher and two complimentary airline passes per year.
20.74% p.a. 0% p.a. for 12 months with 1% balance transfer fee $395 p.a. Go to site More info
Bank of Melbourne Vertigo Visa Credit Card
Enjoy a low annual fee combined with 0% p.a. balance transfer offer for 18 months and 0% p.a. for up to 6 months on purchases.
0% p.a. for 6 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
Bank of Melbourne Amplify Signature
Receive 30,000 bonus points when you meet the minimum spend. Also enjoy low introductory offers on purchases and balance transfers.
0% p.a. for 6 months (reverts to 19.49% p.a.) 0% p.a. for 18 months $279 p.a. Go to site More info
Bank of Melbourne Amplify Classic - Amplify Rewards
Enjoy a 0% p.a. interest for 18 months on balance transfers and 0% p.a. for up to 6 months on purchases. Also earn Amplify points on purchases to redeem rewards and travel through Amplify Rewards.
0% p.a. for 6 months (reverts to 19.49% p.a.) 0% p.a. for 18 months $79 p.a. Go to site More info
BankSA Vertigo Visa
A low interest rate card with a low annual fee, a long term balance transfer offer of 0% p.a. for 18 months and an introductory offer of 0% p.a. for 6 months on purchases.
0% p.a. for 6 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
St.George Vertigo Visa
Introductory offer of 0% p.a. for 18 months on balance transfers and 0% p.a. for 6 months on purchases, plus a low annual fee.
0% p.a. for 6 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
St.George Amplify Platinum
This card features a 30,000 bonus points offer, introductory interest rates on balance transfers and purchases.
0% p.a. for 6 months (reverts to 19.49% p.a.) 0% p.a. for 18 months $99 p.a. Go to site More info
St.George Vertigo Platinum
A platinum card with a balance transfer offer of 0% p.a. for 18 months and an introductory purchase offer of 0% p.a. for 6 months.
0% p.a. for 6 months (reverts to 12.74% p.a.) 0% p.a. for 18 months $99 p.a. Go to site More info
St.George Amplify Classic
A low interest rate of 0% p.a. for 18 months on balance transfers.
0% p.a. for 6 months (reverts to 19.49% p.a.) 0% p.a. for 18 months $79 p.a. Go to site More info

Why should I pay by balance in full each month?

Credit cards work best 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 lower or higher number of interest-free days, such as up to 44 days or up to 62 days interest-free. 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. Educational websites such as ASIC’s MoneySmart recommend 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 13.49% 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 to How to avoid credit card interest by paying the full balance

    Default Gravatar
    Sally | April 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?

      Staff
      Anndy | May 3, 2016

      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

    Default Gravatar
    Kathy | June 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?

      Staff
      Jacob | June 25, 2013

      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.

    Default Gravatar
    Vick | April 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?

      Staff
      Jacob | April 26, 2013

      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.

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