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Credit cards offering up to three months interest-free

Credit cards offering up to three months interest-free

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 cardInterest rate (ongoing)Annual feeInterest-free days (max.)
Flexigroup Skye Mastercard23.99%$9990
Beyond Bank Low Rate Visa Credit Card12.49%$4962
People’s Choice Credit Union Visa Credit Card12.95%$5962
Bank of Us Visa Credit Card9.99%$3957

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 cycleInterest-free periodEnd of interest-free period
January 1January 1 + 55 daysFebruary 25
February 1February 1 + 55 daysMarch 28
March 1March 1 + 55 daysApril 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 cardInterest rate (ongoing)Annual feeInterest-free days (max.)
Northern Inland Credit Union Low Rate Visa Credit Card8.99%$00
Bank Australia Low Rate Visa Credit Card9.39%$590
Heritage Bank Gold Low Rate11.80%$00
Qudos Bank Lifestyle12.34%$00
Suncorp Bank Standard Card12.74%$550

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.

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Fact Checked -

This article was reviewed by Product Director Liron Nehmadi before it was published as part of RateCity's Fact Check process.

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Learn more about credit cards

What is a balance transfer credit card?

A balance transfer credit card lets you transfer your debt balance from one credit card to another. A balance transfer credit card generally has a 0 per cent interest rate for a set period of time. When you roll your debt balance over to a new credit card, you’ll be able to take advantage of the interest-free period to pay your credit card debt off faster without accruing additional interest charges. If your application is approved, the provider will pay out your old credit card and transfer your debt balance over to the new card. 

How does credit card interest work?

Generally, when we talk about credit card interest, we mean the purchase interest rate, which is the interest charged on purchases you make with your credit card.

If you don’t pay your full balance each month (or even if you pay the minimum amount), you are charged interest on all the outstanding transactions and the remaining balance. However, interest is also charged on cash advances, balance transfers, special rate offers and, in some cases, even the fees charged by the company.

The interest rate can vary, depending on the credit card. Some have an interest-free period, otherwise you start paying interest from the day you make a purchase or from the day your monthly statement is issued. So avoid interest by paying the full amount promptly.

How is credit card interest charged?

Your credit card will be charged interest when you don’t pay off the balance on your credit card. Your card provider or bank charges you the individual interest rate that is associated with your card, which is usually between 10 and 20 per cent. 

The interest will be added onto your bill each month or billing period if you don’t pay off the balance, unless you are in an interest-free period.

You will be charged interest on anything that hasn’t been paid for inside the interest-free period. Usually you will receive a notice on your bill or statement saying you will be charged interest so you have some form of notice before you’re charged.

How do you use a credit card?

Credit cards are a quick and convenient way to pay for items in store, online or over the phone. You can use a credit card as a cashless way to pay for goods or services, both locally and overseas. You can also use a credit card to make a cash advance, which gives you the flexibility to withdraw cash from your credit card account. Because a credit card uses the bank’s funds instead of your own, you will be charged interest on the money you spend – unless you pay off the entire debt within the interest-free period. If you pay the minimum monthly repayment, you will be charged interest. There are many different credit card options on the market, all offering different interest rates and reward options.