What is credit card interest free period, how does it work and how to use it wisely.
Almost all credit cards come with an interest-free period between 43 up to 60 days. But what does this mean for you as a credit card user?
Here we go through what you should think about when it comes to this interest-free deferral of repayment. While it may be tempting to think about the long interest-free period, it is important that you know how it works.
4 important things to keep in mind
1. The interest-free period is linked to the due date on the credit card invoice – This means that you do not always have an interest exemption for the entire period – but depends on the date you paid with the credit card. It is therefore very important that you have control over the number of days so that you do not go over the interest-free period. Then the purchases you have made with the credit card can quickly become more expensive than you had planned.
2. Avoid cash withdrawals by credit card – If you withdraw money with the credit card, the interest rate starts to run from the withdrawal date. This also applies if you transfer money to another account from the credit card.
3. Avoid paying bills with a credit card – If you use the credit card to pay bills, the interest-free period usually does not apply.
4. Avoid partial payment of invoice – If you choose partial payment, the interest rate starts ticking on the remaining amount on the credit card. The interest exemption only applies when you pay the entire invoice. The interest rate is often calculated from the actual transaction date when you pay the invoice in installments. Our tip is to always pay the entire invoice before due date to avoid this.
This is how credit card interest free period works:
Let’s say you use a credit card as a gas card to get cheap gas and a discount when you refuel. Depending on the date you fill the tank, your interest-free period may look like this:
Example 1:
- You fill the tank and pay by credit card on March 14.
- The bill will be sent out on 1 April.
- The bill is due April 15.
- Your interest-free period is 32 days – from March 14 to April 15.
Example 2:
- You fill the tank and pay with a petrol card on March 29.
- The bill will be sent out on 1 April.
- You will receive an invoice with due date 15 April.
- Your interest-free period will then be 13 days – from March 29 to April 15.
Credit cards have many benefits
As you can see from the example above, it is important to have control over whether you are to utilize the interest-free period to the max. Always remember that the interest-free period on the card only applies to the payment of an item or service and avoid withdrawing cash with the credit card.
If you follow these tips, the credit card can be a good supplement to your everyday finances. You can save money on discounts and bonuses and get free travel insurance and other benefits when you use credit cards.
Summary
Using a credit card can be risky. However, credit card customers can avail interest free time to take advantage of zero interest. While it can be difficult to pay off your dues in one go, careful planning can help you avoid overpaying your dues. In this article we have covered all the required answers to resolve following important questions:
- What is credit card interest free period
- What is interest free period credit card
- What is interest free period on credit card how does it work
- What is credit card with interest free period
- Credit card interest free period explained
- What is credit card no interest free period