An interest-free credit card allows Australians to pay for credit card purchases or debt with no interest charged for a fixed introductory period. Essentially, it gives you more time to pay off the outstanding balance of your card, regardless of your statement period, as long as you make minimum monthly payments. 

Typically, credit cards offer up to 44-55 days interest free before you need to make minimum credit card repayments by the due date, or you'll be charged interest on your card balance. But a zero per cent purchase card usually gives users between six and 15 months, sometimes higher, before they are hit with interests.

That means cardholders may be paying no interest on the outstanding balance of their credit card for the first year of having it.

Calculate how much you could save from our purchase rate credit cards

Product Name Card
Balance Transfer Rate
Annual Fee
Potential Savings
Fees & Interest
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Balance Transfer Rate

20.24%

Annual Fee

$0

for 12 months then $87

$575

2 years and 3 months

$1,249

More details

Balance Transfer Rate

0%

for 6 months then 21.49%

Annual Fee

$0

for 12 months then $30

$1,294

1 year and 11 months

$529

More details

Balance Transfer Rate

0%

for 22 months then 21.49%

Annual Fee

$0

for 12 months then $99

$1,625

1 year and 9 months

$198

More details

Balance Transfer Rate

0%

for 22 months then 21.49%

Annual Fee

$0

for 12 months then $99

$1,625

1 year and 9 months

$198

More details

Balance Transfer Rate

0%

for 22 months then 21.49%

Annual Fee

$0

for 12 months then $99

$1,625

1 year and 9 months

$198

More details

Balance Transfer Rate

5.99%

for 5 months then 21.24%

Annual Fee

$0

for 12 months then $89

$855

2 years and 1 month

$968

More details

Balance Transfer Rate

0%

for 22 months then 21.49%

Annual Fee

$0

for 12 months then $55

$1,713

1 year and 9 months

$110

More details

Balance Transfer Rate

0%

for 22 months then 21.49%

Annual Fee

$0

for 12 months then $55

$1,713

1 year and 9 months

$110

More details

Balance Transfer Rate

0%

for 22 months then 21.49%

Annual Fee

$0

for 12 months then $55

$1,713

1 year and 9 months

$110

More details

Balance Transfer Rate

5.99%

for 5 months then 21.24%

Annual Fee

$89

$855

2 years and 1 month

$968

More details

Balance Transfer Rate

6.99%

for 12 months then 21.49%

Annual Fee

$99

$1,184

2 years

$640

More details

Balance Transfer Rate

21.49%

Annual Fee

$49

for 12 months then $99

$444

2 years and 3 months

$1,379

More details

Balance Transfer Rate

12.54%

Annual Fee

$0

$1,313

1 year and 11 months

$511

More details

Balance Transfer Rate

2.99%

for 9 months then 10.99%

Annual Fee

$49

$1,503

1 year and 10 months

$320

More details

Balance Transfer Rate

2.99%

for 9 months then 10.99%

Annual Fee

$69

$1,459

1 year and 10 months

$365

More details

Balance Transfer Rate

9.59%

Annual Fee

$99

$1,223

2 years

$601

More details

How does interest on new purchases work?

A credit card is like a line of credit with a provider, in that you essentially borrow money from your card provider to fund a purchase. When you apply for a credit card, the bank assesses your income and will assign you a credit limit based on what you can afford to pay back. 

At the end of each billing cycle (typically monthly) you will be sent a statement showing the minimum amount you have to pay back, including any interest payable on the balance.

When talking about credit card interest, providers are typically talking about the purchase interest rate. This is the interest rate at which any purchases made are charged annually if you do not pay your credit card balance in full each statement period, even if you make minimum payments. 

  • There is also cash advance interest, which is the rate charged on money withdrawn from ATMs or branches. You may also come across balance transfer rates, which are the rates charged for transferring your outstanding balance onto a balance transfer credit card. 

Your provider will charge the purchase rate against any outstanding balance not paid within this statement period. The interest rate can vary, depending on the credit card. If your interest rate is 16 per cent, for example, you will not be charged 16 per cent interest on your outstanding balance every month. Instead, this is an annual rate, charged daily on the number of days in your statement period (if you have an outstanding balance).  

A credit card provider may calculate your interest as follows:

  1. Find the average balance over your statement period
  2. Multiply the average balance by the daily interest rate (e.g 16 per cent divided by 365)
  3. Multiply that figure by the number of days in your statement period.

Some credit cards come with a set number of days interest free, otherwise you'll start accruing interest from the day you make a purchase, or the day your monthly statement issued. Other cards may offer 0 per cent interest offers that last a number of months. If you can't meet your monthly repayments, these cards may be a helpful alternative.

How to use an interest free credit card

There are a few reasons why a cardholder may want to avoid paying purchase interest for a select period of time, as opposed to choosing a standard low rate credit card. 

  • Big-ticket purchases

If there’s something expensive you know you need to pay for, such as an upcoming overseas holiday or a wedding, it may be helpful to get a zero per cent purchase card to fund the purchase. With a zero per cent purchase card, you could pay off the expensive purchase over time without being hit with interest. Take note that you could be charged card fees, such as an upfront annual fee, a higher interest rate on purchases, or a cash advance rate after the introductory period ends.

  • Pay down debt

Interest free credit cards can also be used as a debt management tool, particularly if the card comes with a balance transfer offer. A balance transfer is where a cardholder can move their outstanding credit card debt to another card that does not charge interest for a set period of time. This may give struggling Aussies some much needed breathing room to get on top of their credit card debt without being stung by the purchase rate, which only helps debt grow further. 

Keep in mind that balance transfer card providers may charge a balance transfer fee, typically around 2 per cent of your outstanding balance. Further, if you haven't paid off your full closing balance by the time the interest free period ends, you'll immediately begin accruing interest on your credit card account. It's recommended you make a plan and set a budget to ensure your balance is paid in full by the end of the interest free period before making a card application. 

  • Points chasing

Australians love to collect credit card rewards points. These can be exchanged within rewards programs for a range of perks such as Qantas frequent flyer points, or even appliances, gift cards and cashback. If you're a points chaser looking to keep costs down, choosing an interest-free credit card with a rewards program may be one way to boost your bonus points without worrying about accruing interest on your balance and falling into debt. You may also be able to take advantage of credit card perks and protections such as complimentary travel insurance.

Features of an interest free credit card

It's important that you do your research around what costs and fees may be associated with your potential new credit card. 

There are several key features you should keep an eye out for with interest-free credit cards:

  • Long interest-free periods – To make the most out of your zero per cent purchase card, consider a card with a long interest-free promotional period. This will give you time to develop a solid payment plan to clear the debt before the interest-free period ends.
  • Low ongoing purchase rate – Like anything, all good things must come to an end, and so must interest-free periods. Does your card switch to a low rate after its interest-free period ends, or is its standard purchase rate higher than average? Before you sign up, it’s important you focus on the credit card interest rate you will be paying when the promotional period expires.
  • Low or no annual fee – You could argue that a higher annual fee is worth it if the card offers you a longer interest-free period or a lower ongoing purchase rate. But if you’re looking for maximum value, seek a card with a low or no annual fee plus the features that suit your personal needs.
  • Always read the product disclosure statement and the terms and conditions of any potential credit cards before applying. The product disclosure statement contains important information around any potential fees and ongoing costs, and the terms and conditions can outline the conditions of use and any eligibility criteria you may need to meet before applying. If your credit card application is rejected, this can negatively impact your credit score.

What traps should you beware of with interest free cards?

While interest-free cards do have their perks, shoppers should be cautious.

If you’ve still got an outstanding debt when the introductory period ends or you’ve spent over the card's limit, you could be in serious financial trouble.

To avoid falling into debt, credit card holders should make regular repayments to the card. Having the debt cleared entirely when the promotional period ends can let you dodge interest charges.

While interest-free cards sound attractive, if you’re someone who has trouble managing your finances, you may be better off saving for your purchase first and paying upfront. You should carefully look at your specific financial situation, budget and spending profile before making the decision to take out any credit product.

Alternatives to interest-free credit cards

Still not sure if an interest-free credit card is right for your specific financial situation? Here are some alternatives:

  • Low-rate credit cards. If you're the type of cardholder who always struggles with debt and paying off your card balance before the days interest free period is up, it may be worth considering a low rate card instead. A credit card is always going to eventually charge you interest if you don't pay your card account on time, so keeping the amount of interest charged as low as possible may be your solution.

  • Debt consolidation personal loans. If you have multiple sources of debt and are just looking for a means of paying it off (and don't trust yourself to use your new card responsibly), it may be worth considering a debt consolidation personal loan instead. This is where you roll all your existing debts and expenses on to the one loan to simplify your financial situation. With one regular loan repayment and one interest rate to manage, this can significantly simplify your debt repayment process. Further, personal loans typically come with lower interest rates than credit cards.

  • Debit cards. While they may not offer the same perks, rewards and access to credit as a credit card, if you're struggling with debt, sticking with spending only from your bank account is one way you can avoid your card repayments falling into arrears. After all, you're only spending money you actually have.

    Further, debit cards typically come with low fees, if any. Compared to your standard, costly annual fees associated with credit cards, this may also help you to keep costs down. Further, some bank accounts also come with perks similar to credit cards, such as not charging you overseas fees and offering the ability to hold multiple currencies at once. In this way, it may pay to not overlook the humble bank account.

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 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.

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 to calculate credit card interest

Credit card interest can quickly turn a manageable balance into unmovable debt. So being able to understand how interest rates translate into dollars is an important skill to acquire.

The common mistake people make is focusing on the credit card’s annual percentage rate (APR), which often sits between 15 and 20 per cent. While the APR does provide a rough idea of how much interest you’ll pay, it’s not entirely accurate.

This is because you actually accrue interest on your balance daily, not annually. So, you need to work out your daily periodic rate (DPR). To do this, divide your card’s APR by the number of days in a year (e.g. 16.9 per cent divided by 365, or 0.05 per cent). You can then apply this figure to the daily balance on your credit card.

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.

How do you use credit cards?

A credit card can be an easy way to make purchases online, in person or over the phone. When used properly, a credit card can even help you manage your cash flow. But before applying for a credit card, it’s good to know how they work. A credit card is essentially a personal line of credit which lets you buy things and pay for them later. As a card holder, you’ll be given a credit limit and (potentially) charged interest on the money the bank lends you. At the end of each billing period, the bank will send you a statement which shows your outstanding balance and the minimum amount you need to pay back. If you don’t pay back the full balance amount, the bank will begin charging you interest.

Can a pensioner get a credit card?

It is possible to get a credit card as a pensioner. There are some factors to keep in mind, including:

  • Annual income. Look for credit cards with minimum annual income requirements you can meet. 
  • Annual fees. If high fees are a concern for you, opt for a card with a low or $0 annual fee. 
  • Interest rate. Make sure you won’t have any nasty surprises on your credit card bill. Compare cards with a low interest rates to minimise risk.

Current Interest Rate

This is the current interest rate on your existing credit card.

How to pay a credit card from another bank

Paying or transferring debt from one lender to the other is called a balance transfer. This involves transferring part or all of the debt from a credit card with one lender to a credit card with another. As part of the process, your new lender will pay out the old lender, so that you now owe the same amount of money but to a new institution.

Many credit card providers offer an interest-free period on balance transfers to help new applicants better handle their debt. During this period, cardholders are not required to pay interest on the debt they brought over from the other card. This can be a great opportunity for consumers to pay off credit card debt with no interest. There are often fees associated with balance transfers; normally, these are a percentage of the amount transferred.

So make sure you read the terms and conditions of the card before transferring any debt across.

Should I get a credit card?

Once you've compared credit card interest rates and deals and found the right card for you, the actual process of getting a credit card is quite straightforward. You can apply for a credit card online, over the phone or in person at a bank branch. 

Which credit card has the highest annual percentage rate?

The credit card market changes all the time, so the credit card with the highest annual percentage rate is also liable to change.

Keep in mind that credit card interest rates are expressed as a yearly rate, or annual percentage rate (APR). A low APR is generally good but also consider:

  • There can be different APR's for each feature of the card (e.g. purchases may have an APR of 14 per cent, while cash advances on same card could have an APR of 17 per cent.
  • Credit cards with a variable rate can change throughout the year, affecting your APR, so check the full details.
  • If you pay your balance in full every month, having the lowest APR is not as important as the other fees associated with the card. However, if you carry a balance from month to month, then you want the lowest APR possible.

How to get a free credit card

There's no such thing as a free lunch. All credit cards come with associated costs when used to make purchases, even if it’s simply the cost of making repayments.

However, many lenders offer incentives for customers such as a $0 annual fee or 0 per cent interest on purchases during an introductory period. Additionally, paying off your balance in full during an interest-free period means you could only have to pay back the cost of purchases without interest. You could also be eligible for additional rewards such as cashback during that time, saving you more money.

What should you do when you lose your credit card?

Losing your credit card is a serious situation, and could land you in financial trouble. Here is a simple guide detailing what to do when you lose your credit card.

Lock you card – Contact your provider and inform them about your lost credit card. From here lock, block or cancel your card.

Keep track of transactions – Look out for unauthorised credit card transactions. Most banks protect against fraudulent transactions.

Address recurring charges – If your card is linked to recurring charges (gym membership, rent, utilities), contact those businesses.

Check credit rate – To ensure you’re not the victim of identity theft, check your credit rating a month or two after you lose your credit card.

How do you cancel a credit card?

It’s important to cancel your old cards to avoid any additional fees. Unless you’re doing a balance transfer, you’ll need to pay the outstanding balance before you cancel your credit card. If you’ve opted for a card with reward points, make sure you redeem or transfer the points before you close your account. To avoid any bounced payments and save yourself an admin headache, redirect all your direct debits to a new card or account. Once you’ve done all the preparation, call your bank or credit card provider to get the cancellation underway. Once you receive a confirmation letter, destroy your card and make sure the numbers aren’t legible.

How easy is it to get a credit card?

For most Australians, there are no great barriers to applying for and getting approved for a credit card. Here are some points that a lender will consider when assessing your credit card application.

Credit score: A bad credit score is not the be all and end all of your application, but it may stop you being approved for a higher credit limit. If your credit score is less than perfect, apply for the credit limit that you need, rather than the one you want.

Annual income: Most credit cards have minimum annual income requirements. Make sure you’re applying for a card where you meet the minimum.

Age & residency: You need to be at least 18 years old to apply for a credit card in Australia, and most require that you are an Australian citizen or permanent resident. However, there are some credit cards available to temporary residents.

How to get money from a credit card

You can get money from a credit card, but generally it will cost you.

Withdrawing money from a credit card is called a cash advance, as it operates more as a loan than a simple cash withdrawal. Because it is a loan, you may be charged interest on your cash advance as soon as you make the withdrawal. Interest rates are also usually much higher for cash advances than standard credit card purchases.

In addition to the interest rate, you may also be charged a cash advance fee. This could be a flat rate, or a percentage of your total cash advance. If you are considering a cash advance, make sure to add up how much it will cost you before committing.

What is a credit card?

A credit card is a payment method which lets you pay for goods and services without using your own money. It’s essentially a short-term loan which lets you borrow the bank’s money to pay for things which you can pay back – potentially with interest – at a later date. Credit cards can also be used to withdraw money from an ATM, which is known as a cash advance. Because you’re borrowing money from a bank, credit cards charge you interest on the money you use (unless you repay the entire debt during the interest-free period). When you apply for a credit card, the bank gives you a credit limit which sets the maximum amount you can borrow using your card. Credit cards are one of the most popular methods of payments and can be a convenient way of paying for goods and services in store, online and all around the globe.

What should you do if your credit card is compromised?

Credit card fraud is a serious problem. If your credit card is compromised and you’re wondering what to do, here are a few precautionary steps to take.

Contact you credit provider – Get in touch will your credit card provider. If you feel your card has been compromised, you should be able to lock or block it.

Monitor your accounts – Keep an eye on your credit card accounts. Any unauthorised transactions could be a sign your credit card has been compromised.

Check your credit rating – It’s also important to check your credit rating, to ensure you’re not a victim of identity theft or some other financial mischief.

How to get a credit card for the first time

A credit card can be a useful financial tool, provided you understand the risks and can meet repayment obligations.

If you’re a credit card first-timer, review your options. Think about what kind of credit card would suit your lifestyle, and compare providers by fees, perks and repayments.

Once you’ve selected a card, it’s time to apply. Credit card applications can generally be completed in store, online or over the phone.

When you apply for a credit card for the first time, you must meet age, residency and income requirements. As proof, you must also provide documentation such as bank account statements.

How to pay a credit card

There are a few ways to pay a credit card bill. These include:

  • BPAY - allows you to safely make credit card payments online.
  • Direct debits - set up an automatic payment from your bank account to pay your credit card bill each month. You can choose how much you want to pay of your credit card bill when you set up the auto payments.
  • In a branch.
  • Via your credit card provider's app.