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How a credit card interest-free period works
Most credit cards in Australia offer interest-free days on purchases. Here's what you need to know to make use of them and save on credit card interest.
Interest-free days are a common credit card feature that gives you a way to make purchases without being charged interest for a set number of days in each statement period. They begin on the first day of your statement period and end on the payment due date.
For example, with a credit card that offers up to 55 days interest-free, you would get the maximum 55 days for purchases made on day 1 of your statement period. And a purchase made on day 30 would give you 25 days to pay it off before interest is charged.
Take note: Usually, you need to pay your credit card balance in full by the due date on your statement to make use of this interest-free period.
How do interest-free days work?
This visual example of interest-free days highlights the interest-free period (in green), when purchases are made, when the statement is issued and what happens if you pay less than the full amount for a billing cycle.
Example: How to use the interest-free period on a credit card
Say you had a credit card that offers up to 55 interest-free days, with a statement period that starts on the 1st of each month and ends on the 30th. If you were making purchases in June, here's how the time period would look:
1st June. First day of the statement.
30th June. Last day of the statement.
25th July. Payment due date for this statement period.
In this case, the 55 interest-free days begin on 1st June and end on the 25th of July. So, here's an example of how this credit card's interest-free period would work for your monthly purchases:
You make a $200 purchase on 1st June. You don’t have to pay any interest towards this purchase until 25th July, which gives you 55 interest-free days.
You make a $100 purchase on 20th June. This is the 20th day of your statement period, which means you get 35 days interest-free before a payment is due on 25th July.
You make a $150 purchase on 30th June. This is the last day of your statement period but the purchase won't attract any interest until 25th July, giving you an interest-free period of 25 days.
In this example, you would have a credit card balance of $450 from new purchases on your June statement. If you paid the total amount owed by the 25th July, you wouldn't be charged interest on your purchases. You'd also get interest-free days for the next statement period.
Statement period or billing cycle. The statement period shows activity on your credit card account and usually runs for 30 days, or from when your last statement was issued to when the next one is issued.
Payment due date. This date is listed on your statement and tells you when you need to pay at least the minimum amount. If you want to get interest-free days, you'll usually have to pay the total balance by the due date.
Closing balance or payment closing balance. The total you need to pay by the due date on your statement if you want to get interest-free days for the next statement period. A "closing balance" is usually the total of what's owed on your account, while a "payment closing balance" might be different if you have a promotional rate or offer for part of your balance.
Minimum monthly payments. This is the minimum you need to pay by the due date on your statement to avoid late fees and a late payment listing on your credit report. You usually can't get interest-free days for purchases if you only pay this amount.
Purchase rate. The interest rate charged on purchases. Interest-free days help you avoid this cost.
Take note: Interest-free days only apply to new purchases, including groceries and retail shopping, petrol, travel bookings and even medical appointments. Transactions that don't typically qualify for this interest-free period include cash advances, balance transfers and BPAY payments.
Is a credit card with interest-free days worth it?
Most credit cards in Australia offer interest-free days on purchases, so it may not be the main feature you look at when comparing cards. But if you pay off your credit card balance in full by the due date each month, a card with interest-free days means you can make purchases without paying interest. This could be ideal if you use a credit card to earn rewards or for short-term cash flow such as spending between monthly paydays.
You could also use it as an alternative to buy now pay later services. But if you think you might not be able to pay the account's closing balance in full each month, you may want to consider low interest rate credit cards and 0% purchase offer credit cards.
Finder survey: How long have Australians had their current interest-free credit card?
Response
5+ yrs
37.5%
2 yrs
27.94%
1 year
13.24%
3 yrs
13.24%
Less than 1 year
4.41%
4 yrs
3.68%
Source: Finder survey by Pure Profile of 1113 Australians, December 2023
Frequently asked questions
What is the maximum number of interest-free days I can get?
The humm90 Mastercard offers up to 110 days interest-free on all purchases (excludes cash advances). This is the highest number of interest-free days currently available on a credit card in Australia according to the Finder database.
In comparison, most other credit cards offer between 44 and 55 days interest-free, with a few also offering up to 62 days interest-free. These are also other cards that offer extended interest-free finance options with specific retail partners.
Do additional cards also get interest-free days?
Additional cards linked to your primary card follow the same billing cycle as the primary card and offer just as many interest-free days on purchases.
I can’t pay my account’s closing balance in full this month, but I can in the future. Will I ever get interest-free days again?
Usually, when you carry a balance over to your next statement period, you won't be eligible for interest-free days for that statement period. To get the interest-free period back, you'll need to pay the total amount listed on your next 1-2 statements by the due date. This does vary by card, so check the details for your account or ask your credit card provider what you need to do to get interest-free days again.
How do I get interest-free days?
You usually need to repay the full closing balance that's listed on your statement by the due date to get interest-free days. In most cases, you also need to pay the full balance for the previous statement, as well as the statement issued at the end of that period.
Amy Bradney-George was the senior writer for credit cards at Finder, and editorial lead for Finder Green. She has over 16 years of editorial experience and has been featured in publications including ABC News, Money Magazine and The Sydney Morning Herald. See full bio
Amy's expertise
Amy has written 579 Finder guides across topics including:
If you only paid 95% off the credit card, will you:
a) lose the 55 days free interest rate from the next due date; and
b) be charge full interest for subsequent purchase until your credit provider restores the free 55 day period.
IndulaOctober 7, 2008
can the whoever wrote the post explain what does it mean “a new purchase”??
[Quote]No. It means that the maximum number of days you won’t be charged interest for a ****new purchase*** is 55 days.[Quote]
TinhOctober 18, 2006
If you purchased something on the 26th of May, it will appear in your May statement. Your May statement will be due around the 24th of June.
If you purchased something on the 19th of July, it will appear in your July statement. Your July statement will be due around the 25th of August.
So if you make a purchase in a particular month, that amount will be due the next month by a due date depending on how many interest free days you get.
FredOctober 16, 2006
When would the next payment be required if I bought something on the 26th of May? Would it be the 19th of July?
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If you only paid 95% off the credit card, will you:
a) lose the 55 days free interest rate from the next due date; and
b) be charge full interest for subsequent purchase until your credit provider restores the free 55 day period.
can the whoever wrote the post explain what does it mean “a new purchase”??
[Quote]No. It means that the maximum number of days you won’t be charged interest for a ****new purchase*** is 55 days.[Quote]
If you purchased something on the 26th of May, it will appear in your May statement. Your May statement will be due around the 24th of June.
If you purchased something on the 19th of July, it will appear in your July statement. Your July statement will be due around the 25th of August.
So if you make a purchase in a particular month, that amount will be due the next month by a due date depending on how many interest free days you get.
When would the next payment be required if I bought something on the 26th of May? Would it be the 19th of July?