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How does 55 Interest free days work?

how does interest free credit work

What is an interest free period? An interest free period on a credit card is the period in which you can make purchases using your credit card without having to pay interest on those purchases. Many credit cards include an interest free period of up to 55 days.

To avoid paying any interest on purchases made with a credit card you must pay your full closing balance by the payment due date every month, failure to make clear the full balance on your credit card will mean you will loose the 55 interest free period for your next and current statement period.

How does the interest free period work?

The Interest free period offered on Interest free period credit cards is the sum of 2 time periods. The first period is the Monthly Statement Period that runs for approximately 30 days. The second period commences on the day following the last day of the Statement period and ends on the date that the statement balance must be paid for. This Payment Period typically runs for 14 or 25 days, depending whether the card has 44 (14 + 30) or 55 (25 +30) days interest free period.

How many days is my interest free period?

The actual number of interest free days you’ll receive varies depending on when you make purchases and the number of days remaining in your statement period.

For example, if you make a purchase on day 10 of your statement period, you’ll have 20 days remaining until your statement period closes, plus 25 days to make your full payment.

Key actions to benefit from an interest free period.

  • Always pay your closing balance in full by the due date to avoid interest charges and to retain your interest-free days for the next statement period
  • Maximize your interest free period by making purchases early in your statement period
  • Check your Statement to confirm when your Statement Period commences, don’t assume it is the 1 st of each calendar month as it rarely is.

What happens if you lose the interest-free period?

Referencing the Statement cycle above, if the full closing balance shown on the statement is not paid by the Payment Due Date (May 25 th ) this will have the following impact:

  • No interest interest-free period will be applied to this statement period, so interest for each purchase made during the statement period will be calculated from the day each purchase was made. The sum of this interest will be included in the May statement
  • No interest-free period will be applied to your May statement period. As a consequence interest will be charged on the whole of the May statement calculated on the daily balance. The loss of the interest period really hurts here as interest is charged not only on any new purchases made across the May statement period, but also on the outstanding balance carried over from the April Statement period.
  • The interest from the May statement is included your opening card balance for your June statement. This means you are starting to be charged interest on interest .

Payment in full = Interest Free Period

Paying the closing balance published on your monthly credit card statement in full, by the due date must be done each month, to benefit from an interest free period on any purchases. Failing to pay the closing balance in full not only impacts the proceeding month but also the following month, a potentially expensive double whammy, which you should seek to avoid.

One exception to be aware of is that any Balance Transfers from other cards tend not to carry with them interest free periods for the purchases you have made on the card prior to transfer.

To avoid missing paying your Credit Card in full it is useful to synch the date of the month you get paid with the date your credit card bill falls due. You should aim to have a statement Period Start date which is a couple of days post your pay day. To change your current Statement period starts date, get in touch with your credit card provider.

How to Maximize you Interest free days


first step in maximizing your interest free period is to make sure you know your Statement Period end date, you will find this on your Credit Card Statement, and it will typically be the same date each calendar month, so for example the 5 th .

Given the statement end date of the 5 th of the month, your Statement period Start Date is the 6 th of the month, this is the date the Interest Free Period commences. To maximize the interest free period any purchases should be made as early in the Statement period as possible, so on the 6 th would be the absolute best day as this would give the full 55 days interest free period. Whilst a purchase on the 10 th would benefit from 4 days less and so a total of 51 interest free days.

By maximizing the number of interest free days you ensure you have the greatest number of days to pay your credit card balance without attracting any interest charges.

Published 12 th November 2013 and updated 22 December 2015

55 Interest Free Days Credit Card Offers

Introductory Offer. 0% p.a. on Balance Transfers for 18 months PLUS 0% p.a. on Purchases for 3 months.

Offer closes. 30th September 2015.

  • The transfer can be made from a maximum of 3 credit or charge cards - none of which can be a Westpac Credit Card
  • Upto 55 Days interest free on purchases
  • Low minimum Income requirement - $15,000 p.a.
  • Low Annual card fee - $59 p.a.
  • Fast decision for on line applications - within 60 seconds

Offer Conditions. Closes: 23rd September 2015

  • Up to 55 interest free days on purchases - providing you pay off your balance in full every month including any balance transfer amount.
  • Additional Card Holder - Add an additional card holder for $0
  • Low Purchase Rate - 13.24% p.a.
  • Low Minimum Income to be eligible to apply - Just $15,000 p.a.
  • Maximum Credit limit - $40,000
  • Fast decision for online applications - within 60 seconds

Offer Conditions: Apply by 11th October 2015

  • Up to 55 interest free days on purchases - providing you pay off your balance in full every month including any balance transfer amount.
  • 1 Additional Card Holder - Add an additional card holder for $0
  • Card Security - Verified by Visa to protect your online payments.
  • Visa payWave - provides the convenience of tap and go quick payments on transactions up to $100.
  • Choose your card color - A choice of a pink or silver.
  • 24/7 emergency travel assistance - provided by Visa Customer Assistance Services,
  • Visa Entertainment - special offers on events and entertainment
  • Balance Transfer - 4.99 p.a. for 6 months
  • Balance Transfer limit - 70% of your approved credit limit.

All credit card offers from nab >>

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