Buy now… and pay much later. There are a handful of credit cards in Australia that allow you to do just that.
More than 100 credit cards on the RateCity credit card database have maximum interest-free periods of 55 days.
But Flexigroup, Beyond Bank, People’s Choice Credit Union and Bank of Us have credit cards with even longer interest-free periods:
| Credit card | Interest rate (ongoing) | Annual fee | Interest-free days (max.) |
|---|---|---|---|
| Flexigroup Skye Mastercard | 23.99% | $99 | 90 |
| Beyond Bank Low Rate Visa Credit Card | 12.49% | $49 | 62 |
| People’s Choice Credit Union Visa Credit Card | 12.95% | $59 | 62 |
| Bank of Us Visa Credit Card | 9.99% | $39 | 57 |
Regardless of the credit card you choose, it’s important to use it responsibly, because if you don’t manage the repayments, you might find yourself in a debt trap.
Why 55 days can sometimes mean 25 days
One thing to be aware of with interest-free periods is that you can’t assume you’ll always be entitled to the exact number of days quoted.
That’s because most credit card providers talk about “maximum” interest-free periods or interest-free periods of “up to” a certain number of days.
With most credit cards, the interest-free period begins not when you make a purchase but at the start of your statement cycle.
For example, let’s say your credit card has an interest-free period of up to 55 days, and that the card’s cycle begins on the first day of each month – January 1, February 1, March 1, etc. Any purchase made during January would be due on February 25 (or January 1 + 55 days).
So a purchase made on January 1 would have an interest-free period of 55 days, but a purchase made on January 31 would have an interest-free period of 25 days.
| Start of cycle | Interest-free period | End of interest-free period |
|---|---|---|
| January 1 | January 1 + 55 days | February 25 |
| February 1 | February 1 + 55 days | March 28 |
| March 1 | March 1 + 55 days | April 25 |
Some low-rate credit cards don’t have interest-free periods
There are also credit cards that have interest-free periods of 0 days.
With these credit cards, you start running up interest immediately. So even if the rate is relatively low by credit card standards, your debt can quickly increase.
| Credit card | Interest rate (ongoing) | Annual fee | Interest-free days (max.) |
|---|---|---|---|
| Northern Inland Credit Union Low Rate Visa Credit Card | 8.99% | $0 | 0 |
| Bank Australia Low Rate Visa Credit Card | 9.39% | $59 | 0 |
| Heritage Bank Gold Low Rate | 11.80% | $0 | 0 |
| Qudos Bank Lifestyle | 12.34% | $0 | 0 |
| Suncorp Bank Standard Card | 12.74% | $55 | 0 |
How to switch credit cards
If you want to compare credit cards and then switch to a better alternative, there are two ways you can go about it.
The first way involves paying off the entire debt on your current card, closing it and then opening a new credit card account.
The second way involves doing a balance transfer, which means transferring the debt from your current card to your new card. However, there are likely to be a couple of catches:
- You probably won’t be able to transfer your entire debt
- You’ll probably have to pay a balance transfer fee
One positive, though, is that many balance transfer credit cards allow you an interest-free period (of, say, 12 months), which gives you the chance to clear all your debt without also having to pay interest.
If you do a balance transfer, you might want to close your old credit card account, so you don’t have to pay two annual fees. Also, it’s generally a good idea to avoid using the new card, because the interest-free offer will apply only to the debt you transferred, not any new debt.
