Compare credit cards with an interest-free period

What are interest-free period credit cards?

Credit cards with an interest free period allow you to pay no interest on purchases for a set period of time. The interest-free period is the maximum number of days you won’t be charged interest on any purchases you’ve made with the credit card, provided you pay off your balance in full by the due date.

Not all purchases on a credit card qualify for an interest-free period. Credit card companies usually charge interest on cash advances (e.g. withdrawing cash from an ATM using your credit card) from the date of the transaction.

What are interest free credit cards?

Interest-free credit cards are different from a normal credit card with an interest-free period. Interest free cards do not charge interest at all, though there are often terms, conditions, and other limitations involved.

There are three main types of interest-free credit cards:

Lifetime 0% interest cards

Cards with an ongoing 0% interest rate mean you will never be charged interest on purchases made with the card. Instead, these cards typically charge a flat monthly fee if you use the card or carry a balance. They were originally introduced to provide an alternative to buy now pay later (BNPL) schemes.

These cards are typically ‘no-frills’, meaning you won’t get the same perks as a premium card. For example, you won’t be able to earn reward points or receive complimentary insurances, and you may not be able to make cash advances in some cases.

When comparing lifetime 0% interest cards, consider the monthly fee and whether it’s possible to get this waived for you to meet the conditions. If you will regularly use the card and/or carry an unpaid balance, consider checking whether the monthly fee works out cheaper than taking out a low rate credit card with no annual fee. It’s important to consider whether the credit limit will align with your spending habits, as a higher credit limit means higher monthly fees. Also, consider if you will be able to make the minimum monthly repayments consistently on time as part of your budget.

0% purchase rate offers

Credit cards with 0% purchase rate offers allow you to pay no interest on purchases for an introductory period, which could be anywhere from 6 to 25 months. For example, if you had a credit card with a 0% purchase rate offer for 12 months, this means purchases you make won’t accrue interest for 12 months.

At the end of the introductory period, the purchase rate reverts to the card’s standard purchase rate. This new rate will apply to any outstanding balance on the card and any new purchases you make.

If you are comparing cards with 0% purchase rate offers, consider factors like the length of the offer, the revert purchase rate, fees and features. You can compare no and low fee credit cards below with Canstar and select the ‘0% purchase rate offers’ filter.

0% balance transfer offers

A credit card with a 0% balance transfer offer allows you to pay no interest on the balance you transfer for a limited time; in some cases anywhere between 6 and 36 months. This can give you some breathing room to pay off your debt without the challenge of also paying extra interest charges.

At the end of the offer period, the balance transfer rate will revert to a higher rate. If you haven’t paid off the whole amount transferred, you’ll immediately start being charged interest on your outstanding balance at this rate.

If you are comparing cards with 0% balance transfer offers, consider factors like the length of the offer, the revert rate if you don’t pay off your debt in time, and the fees that may apply. You may be charged an annual fee and a balance transfer fee (a percentage of the amount you transfer to the new card).

Some credit cards with 0% balance transfer offers also have 0% purchase rate offers. This could suit people who have existing credit card debt to pay off, but also need to pay for upcoming expenses. However, it’s essential to check the fees, features, terms and conditions involved, especially around when these interest free periods may expire and how much interest you may be charged afterwards.

How to compare interest-free period credit cards

You can compare interest free period credit cards using Canstar’s comparison tool.

When comparing interest-free credit cards, consider the following factors:

• How long is the interest-free period? The longer the period, the more time you will have to repay your purchases or balance before you are hit by interest charges. Lifetime 0% interest cards have an ongoing interest-free period, but you may be charged monthly fees.
• What is the revert rate? This is the interest rate that will apply if you don’t pay off your purchases or balance before the offer period ends.
• How much are the fees? You may want to compare your options and search for a card with no or low annual fees. With lifetime 0% interest cards, you are charged a monthly fee, which may cost you more if you have a higher credit limit.
• Are there any additional features? Some cards may offer complimentary insurance or the ability to earn rewards points, though these could also involve paying higher fees.

If you are considering a credit card, it is a good idea to take the time to read through any key disclosure documents, such as the Target Market Determination (TMD) and Key Facts Sheet, as part of your decision-making. While credit cards can bring benefits, such as helping in an emergency (alongside an emergency fund), there can be drawbacks too, like interest, fees and charges. And if you’re not careful and don’t make regular on-time repayments, a credit card could risk making a negative impact on your credit score.