How to avoid credit card interest by paying the full balance

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 September 21st, 2017
Name Product Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee Product Description
HSBC Platinum Credit Card
19.99% p.a.
0% p.a. for 22 months with 2% balance transfer fee
$99 p.a.
Earn 1 Reward Point per $1 of eligible spend and receive complimentary travel and purchase protection insurances.
Citi Rewards Platinum Credit Card
20.99% p.a.
0% p.a. for 24 months with 1.5% balance transfer fee
$49 p.a. annual fee for the first year ($149 p.a. thereafter)
Earn Reward Points per $1 spent as part of the Citi Rewards Program, plus receive complimentary international travel insurance.
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 with no balance transfer fee.
NAB Low Rate Credit Card
13.99% p.a.
0% p.a. for 16 months with 2% balance transfer fee
$59 p.a.
Receive up to 55 days interest-free on purchases, special offers from Visa Entertainment and Tap and Pay capabilities.
American Express Velocity Platinum Card
20.74% p.a.
0% p.a. for 12 months with 1% balance transfer fee
$375 p.a.
Receive a complimentary Virgin Australia return Economy domestic flight each anniversary year and complimentary travel insurance.
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 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.
Commonwealth Bank Business Gold Awards Credit Card
20.74% p.a.
5.99% p.a. for 5 months
$150 p.a.
Earn up to 2 Awards points per $1 spent, receive an unsecured credit limit of up to $50,000 and up to 55 days interest-free on purchases.
Citi Simplicity Card
19.99% p.a.
0% p.a. for 6 months
$0 p.a.
Earn 10% cashback on eligible purchases (capped at $50 per month) for the first 4 months from card approval.
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 Essential®  Credit Card
14.99% p.a.
0% p.a. for 12 months with 3% 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.
HSBC Platinum Qantas Credit Card
19.99% p.a.
0% p.a. for 6 months
$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.
ANZ Low Rate
12.49% p.a.
0% p.a. for 16 months with 2% balance transfer fee
$58 p.a.
Receive up to 55 days interest-free on purchases, up to 3 additional cardholders at no cost and Mastercard PayPass.
Woolworths Everyday Platinum Credit Card
19.99% p.a.
0% p.a. for 14 months
$0 p.a. annual fee for the first year ($49 p.a. thereafter)
Receive a $50 eGift Card when you apply by 31 December 2017 and make an eligible purchase by 31 January 2018.
Commonwealth Bank Business Awards Credit Card
20.74% p.a.
5.99% p.a. for 5 months
$100 p.a.
Earn up to 1.5 Awards points per $1 spent, easily integrate your online accounting software, plus complimentary Transit Accident Insurance.
28 Degrees Platinum Mastercard
21.99% p.a.
4.99% p.a. for 6 months
$0 p.a.
Designed for travel, benefit from no international transaction fees on purchases and no currency conversion fees.
American Express Business Explorer® Credit Card
16.99% p.a.
$395 p.a.
Earn 100,000 bonus points when you meet the requirement and 2 Membership Rewards points per $1 spent.
Bendigo Bank Platinum Rewards Mastercard
19.99% p.a.
$89 p.a.
Get rewarded for every $1 spent on eligible purchases and balance transfers. Plus, enjoy a range of premium benefits.
Bendigo Bank Low Rate First Mastercard
11.99% p.a.
$29 p.a.
For customers aged 18 to 25 years, this card gives you up to 55 interest-free days and a low variable interest rate on purchases.
Bendigo Bank Low Rate Mastercard
11.99% p.a.
$45 p.a.
A no-frills card with a competitive annual fee and a low variable interest rate of 11.99% p.a. on purchases.

Compare up to 4 providers

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

  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?

    • Staff
      AnndyMay 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.


  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?

    • Staff
      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?

    • Staff
      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.

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