Want to make credit card purchases without paying interest during your billing cycle? Here’s how interest-free days can help.
Interest-free days are a period of time in your billing cycle when you can make credit card purchases without being charged interest. To make use of this interest-free period, you usually have to pay your credit card balance in full by the due date on your statement.
Use this guide to find answers to the most common questions about interest-free days, compare credit cards with up to 55 days interest-free and learn about the key factors to be aware of when using an interest-free card. Feeling more visual? Check out our video explaining interest-free days, or look at a diagram showing how this feature works.
Key definitions you need to know
Before we go further into explaining this credit card feature, make sure you know what these terms mean:
- Statement issue date/ billing cycle. This is the date on which the bank issues your monthly credit card statement.
- Payment due date. The date by which you must pay the balance by to avoid late charges/ fees.
- Purchase rate. The interest rate charged on purchases.
Answers to the most common questions about interest-free days
What does 55 interest-free days mean?
This means that you get 55 days interest-free on your purchases from the start of your billing cycle when you pay the balance in full by the due date on your statement. You get 55 days interest-free on the first day of that billing cycle, 54 on the second day, and so on.
How do I receive interest-free days?
To be eligible to receive interest-free days you must repay your account's outstanding balance in full by the due date on your statement. Usually, you'll need to pay the full balance for the statement prior to the start of that billing cycle as well as the statement issued at the end of it.
Why does it always say "up to 55 days"?
This is because the amount of interest-free days available varies depending on what day of your billing cycle you make the purchase. While you would get 55 days interest-free on purchases made on the first day of the billing cycle, you'd get 54 on the second day and only 1 day interest-free if you made a purchase the day before your statement was issued for that billing period. So "up to" is used to refer to the maximum amount of days you can get interest-free in your billing period.
Is a credit card with interest-free days suitable for me?
If you pay off your credit card balance in full by the due date each month, a card will interest-free days will allow you to make purchases without paying interest. This could be ideal if you use a credit card to earn rewards or for short-term cash-flow such as spending between monthly paydays.
American Express Credit Card Offer
With an American Express Essential Credit Card, you can receive $50 credit to your account when you meet the minimum spend requirement. Plus, enjoy a long-term balance transfer offer and up to 55 days interest-free without paying an annual fee for the life of the card.
- $0 p.a. annual fee
- 14.99% p.a. on purchases
- 0% p.a. for 12 months with 1% balance transfer fee on balance transfers
- Up to 55 days interest free
- Minimum Income Requirement of $40,000 p.a.
Compare 55 days interest-free credit cards
Rates last updated April 29th, 2017.
- American Express Platinum Edge Credit Card
First year annual fee waiver, 0% balance transfer and 5,000 bonus points offers have been extended.
March 28th, 2017
- American Express Explorer Credit Card
Bonus points offer has been changed from 50,000 to 100,000 points and is valid until 15 May 2017.
March 28th, 2017
- Woolworths Everyday Platinum Credit Card
$100 has replaced $50 eGift Card plus BT & annual fee offers have been extended until 30 June 2017.
April 1st, 2017
55 days interest-free period credit card - Video explanation
Click here for video transcript
Hi, I’m Fred Schebesta. I’m here to explain to you what does up to 55 days interest-free actually means on your c redit card. The first thing is, I want to talk about 55 days. Now, 55 days here, there’s actually a little line that goes before that and it says ‘up to 55 days interest-free.’ Now when it says up to, what that mean is, is that it’s up to potentially the date that your statement arrives.
Now I’ve got a bit of a diagram that I want to explain it to you in some concepts. Now the first thing is, you’re not going to get interest-free days if you have a balance. If you have a balance, you just can’t get interest-free days, it doesn’t work that way.
The other thing is that, some cards offer potentially 44 days interest-free or some have actually no interest-free days, so it’s worth checking your card and comparing. When it comes down to it, this core concept of, ‘when is your payment due’. When your payment is due, this is when you have interest-free days up to. So I want to take you through an example here. Now, what I’ve drawn out here is a diagram where we have month one, month two and month three. And let’s just say that you get your statement on the 30th of the month. So we’ve just said here that we have three different statement dates. let’s pretend, on the first day of the month, on potentially on this seventh day of the month, you make a purchase. On that day, you will have 23 days interest-free, and let’s say you have a 55 days interest-free card, you will get another 25 days interest-free. So in total, this purchase on the seventh will actually give you 48 days interest-free. This here is your actual payment due date, and that is when you must clear your balance to keep getting interest-free days.
Let’s just say for example, you were to make a purchase on the very last day of the month, say on the 30th here, obviously it’s the last day of the month, you would only get the 25 days interest-free. So you can see it’s all about when is your payment due date and when is your statement date.
Now the next one is a little bit of a more intense concept - I just want to take you through this. Say you were to make a purchase, here, on the 8th day of the month. Now that purchase there, would not be due on your payment due date, but instead you will get the interest-free days, so the 22 days here, and the 25 days here, on the payment due date. On the 8th, you will get 47 days interest-free. So it’s all about when is your statement, when do you make a purchase and when is your payment due date. Remember, you must clear your balance on your payment due date, otherwise these purchases here will not get interest-free days. So, it’s important to compare if you have interest-free days, and you can do that at https://www.finder.com.au, and I hope that’s helped you out with your 55 days interest-free.
What should I be wary of when using a credit card with an interest-free days offer?
Using a credit card with interest-free days on purchases can be good if you know exactly what you’re doing. Here are some of aspects you should consider:
- Making minimum monthly payments. If you’re planning to make no more than minimum monthly payments towards your credit card, know that you won’t get any interest-free days at all.
- Eligible purchases. Interest-free days are only available for "eligible purchases" made on your card. While this usually includes everyday spending at the supermarket, petrol station, restaurants and so on, exclusions typically apply for cash advance transactions, government payments and some bill payments. Check with your credit card provider for details on what is considered an "eligible purchase" for your card.
- Dates vary. Don’t expect all your credit cards to come with similar billing cycle dates and dues dates. These dates can vary from one card to the next, even when issued by the same card issuer.
- Balance transfers. Usually, if you have a debt on your credit card from a balance transfer, you won't be eligible for interest-free days on new purchases. If you want to transfer a balance and make purchases without interest, you could also consider a card with an introductory rate of 0% for purchases and balance transfers.
Making use of interest-free days
Let’s assume you have a credit card that offers 55 interest-free days and its billing cycle begins on the 1st of each month and ends on the 30th. Given the 55 interest-free days, the due date on your credit card statement would be the 25th of next month. So if you were making purchases in June, here's how it would look:
- 1st June. First day of the statement
- 30th June. Last day of the statement
- 25th July. Due date of your payment for June
In this case, the 55 interest-free days begin on 1st June and end on the 25th July when your payment is due. So here's how your interest-free period would work as you make purchases throughout the month:
- You make a $200 purchase on 1st June. You don’t have to pay any interest towards this purchase until 25th July, which gives you 55 interest-free days.
- You make a $100 purchase on 20th June. This is the 20th day of your billing cycle, so you don’t have to pay any interest towards the purchase until 25th July. This means you get 35 interest-free days.
- You make a $150 purchase on 30th June. This is the last day of your billing cycle but the purchase won't attract any interest until 25th July, giving you an interest-free period of 25 days.
When you're statement is issued for June, you'll owe $450. So as long as you pay this in full by the 25th July, you won't be charged interest on your purchases and can continue to enjoy interest-free days for the next billing cycle.
Diagram: How do interest-free days work?
Interest-free days can be tricky to visualise, so we've drawn up a handy diagram you can use to see how it works. As well as showing the interest-free period (in green), we also show when purchases are made, when the statement is issued and what happens if you pay less than the full amount for a billing cycle (the middle one in this case).
Credit cards that come with 55 interest-free days give you the ability to make purchases and not pay any interest towards them as long as you make timely repayments. Such cards can come with a number of other features as well, so it’s important that you choose a card as per your requirement. Bear in mind that just about every credit card issuer provides cards with interest-free days on purchases, so it is in your most interest to compare as many as possible before making a decision.
More Frequently Asked Questions about interest-free period credit cards
What is the maximum number of interest-free days I can get?
With Australian credit cards that offer interest-free days, the maximum interest-free days you can take advantage of usually vary in between 44 and 55, depending on the card you use. There are also some cards that offer up to 62 days interest-free and some that have extended interest-free finance options with specific retail partners.
Do additional cards also get interest-free days?
Additional cards linked to your primary card follow the same billing cycle as the primary card and offer just as many interest-free days on purchases.
I can’t pay my account’s closing balance in full this month, but I can in the future. Will I ever get interest-free days again?
Once you start paying your account’s closing balance in full each month again, you can start making use of interest-free days on purchases.