One thing credit cardholders are wary about is the interest payable. Some may wonder how interest and purchases are calculated to come up with the monthly bill, while others may not take the time to understand it. It can be a bit confusing but as a credit cardholder, it is important to be aware of what affects your monthly bill. One of these can be the interest-free period.
As a credit cardholder, it is important to be aware of what affects your monthly bill.
What is Interest-free Period?
When it comes to credit cards in Australia, the interest-free period refers to the days when a purchase will not incur interest. For some credit card providers, this period can reach up to 55 days. It does not mean that you will have 55 interest-free days for every purchase you make.
How does the Interest-free Period Work?
Let’s assume that your billing cycle starts on the 1st day of each month, and ends on the 30th of the month. If your credit card offers an interest-free period of 55 days, this means that once the billing cycle ends, you have 25 days to pay the full balance. The interest-free period depends on the date you made a purchase. If you purchase something on the 1st day of the month, this will not incur any interest until the due date, giving you 55 interest-free days. However, if you make a purchase on the 30th, you will only get an interest-free period of 25 days.
Choosing the Best Credit Card Deals
A lot of banks offer credit cards with an interest-free period, but how will you know if it is suitable for you? As long as you can pay your balance on time and in full every month, you will not have a problem. You can set up reminders on your phone so you don’t miss any due dates. If you fail to pay your balance in full on or before the due date, you will not be able to use the interest-free period, which means that you will pay interest.
To get the best credit card deals, make sure to shop around first. Compare credit cards as these vary in features and billing cycle dates, so choose one based on your needs and financial capacity. Keep in mind that the interest-free period does not apply to cash advances, and if you plan to pay only the minimum payments every month, you will not be able to get the interest-free period. Also, when you compare credit cards, ask if there are promotional offers or rewards when you make purchases.
Got other tips on interest-free period and how to get the best credit card deals in Australia? Share your ideas in the comments section below.