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Choosing a credit card with the maximum interest free days may make repayments easier. Compare the maximum interest free days available on a range of credit card options and find one that suits you.

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Mark Bristow

Updated on

22 Nov, 2024

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The 'interest-free period' on a credit card is actually more complicated than you may think. In simple terms, it’s the amount of time when you are not charged interest on a purchase – but just how that’s calculated may surprise you.

To make sure you don’t get stung with an unexpected interest charge on your next credit card bill, here are a few questions and answers that may help you.

What are interest-free days?

Most credit cards offer an interest-free period that’s usually between 40-55 days. However, this does not necessarily mean you have 40-55 days to pay it off before you start being charged interest. This is because the interest-free period depends on your statement cycle, not the purchase date.

If you see a credit card offering “45 days’ interest-free”, this actually refers to the maximum interest-free days available on a purchase. To get the full 45 days, you need to make the purchase on the first day of your monthly credit card statement cycle. Otherwise, instead of getting the maximum interest-free days, you will receive less than the maximum.

How is an interest-free period calculated?

To explain how interest-free days are calculated, let’s say you buy a new TV. Let’s also assume these two things:

Your latest credit card statement cycle lasts from 1 December to 31 December
Your maximum interest-free days is 45 days

Example 1: The maximum interest-free period

You buy the TV on 1 December
You have until 15 February to pay the full amount off your credit card before you start being charged interest

Total number of interest-free days = 45 (the maximum interest-free days)

Example 2: The minimum interest-free period

You buy your TV on 31 December – the same day your statement cycle ends
You have until 15 February to pay the full amount off your credit card before you start being charged interest

Total number of interest-free days = 15 (the minimum interest-free days)

How can I avoid being charged interest on my credit card?

If you don’t want to get stung with interest, you need to pay off your full closing credit card balance on time. This can be especially important for younger Australians or those on lower incomes who lack financial literacy.

If you fail to pay the full closing balance by the due date, you will be charged interest on the purchases listed on your statement. Interest is usually calculated by banks and credit unions based on the purchase date; if the interest is not repaid, it will roll over to your next statement cycle.

To help you pay off your credit card on time, consider the following suggestions:

Select a credit card with an interest-free period that best suits your budget

Different credit cards offer different maximum interest-free days. Although 40-55 is standard, some offer up to 62 interest-free days. RateCity has a credit card comparison tool to help you search for a card that meets your needs.

Ask your provider to move your statement period

Many credit card issuers allow you to pick a statement period on your preferred dates.

For example, if you get paid on the 15th of each month, you might set your credit card balance due date for, say, the 20th.

Set up a reminder to make the payment

Life can get busy and bills get missed, so do yourself a favour and set up a reminder on your calendar to pay your credit card bill. You can do this on your phone or computer calendar or even pocket diary. Just pick whatever you’re most likely to see.

Set up a direct debit from your bank account

As long as you have enough money in your account each month, this is a simple way to pay your credit card bill on time. Most banks and credit unions offer this direct debit service free of charge.

It may be worth exploring the benefits and risks of Buy Now, Pay Later platforms, such as Afterpay or Zip Pay, if you're looking to access credit without being charged interest.

What happens if I can’t pay the full balance of my credit card on time?

If you're not in a position to pay the full amount off on the due date, there are steps you can take to help reduce the credit card interest:

Pay off as much as you can

Every extra dollar you pay off your credit card will save you paying more interest. On your monthly statement, there is a minimum repayment amount, but it’s often a good idea to try to pay as much over this minimum amount as you can afford.

Be disciplined

Try not to put more purchases on your credit card until you pay off your debt.

Low-rate options

Consider switching to a lower-rate credit card once you've paid off your balance in full to avoid snowballing debt in the future. You may also want to consider prioritising low fee options as well to reduce ongoing costs.

Alex Ritchie

Personal Finance Editor

Alex Ritchie was a Personal Finance Writer and Editor at RateCity, and has been writing about Australian finance for over six years. Her expertise and passion covers loans, credit, superannuation, and closing the gender pay gap, and she aims to help young Aussies to overcome their financial apathy. Alongside RateCity, Alex has been published in numerous publications, including Australia's Money Magazine, Business Insider, Lifehacker Australia, and in health via NPS MedicineWise.

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^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, target market determination fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

What are interest-free days?

How is an interest-free period calculated?

To explain how interest-free days are calculated, let’s say you buy a new TV. Let’s also assume these two things:

Your latest credit card statement cycle lasts from 1 December to 31 December
Your maximum interest-free days is 45 days

Example 1: The maximum interest-free period

You buy the TV on 1 December
You have until 15 February to pay the full amount off your credit card before you start being charged interest

Total number of interest-free days = 45 (the maximum interest-free days)

Example 2: The minimum interest-free period

You buy your TV on 31 December – the same day your statement cycle ends
You have until 15 February to pay the full amount off your credit card before you start being charged interest

Total number of interest-free days = 15 (the minimum interest-free days)

What happens if I can’t pay the full balance of my credit card on time?

If you're not in a position to pay the full amount off on the due date, there are steps you can take to help reduce the credit card interest:

Pay off as much as you can

Be disciplined

Try not to put more purchases on your credit card until you pay off your debt.

Compare credit cards with the longest interest free period

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On this page

What are interest-free days?

How is an interest-free period calculated?

Example 1: The maximum interest-free period

Example 2: The minimum interest-free period