Compare credit cards with an interest-free period

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.

Learn More: How do interest-free days work on credit cards?

A common misconception of the interest-free period is that the full period duration applies from the time each purchase is made.

For example, if the interest-free period is up to 55 days, thinking you will have 55 days to pay off each purchase before interest will be charged. But this isn’t the case. The key wording here is “up to”, it’s not 55 days for each purchase.

The interest-free period actually refers to the maximum number of interest-free days that are available on a purchase you make with the card.

The interest-free period typically starts on the first day of your statement period, which is usually monthly or every 30 days. To get the full 55 days interest-free (including the day of the purchase) in our example, a purchase would need to be made on the first day of your statement period.

The first day of the statement period could be the first day of the calendar month, or the monthly anniversary of the date you took out the card. Check your credit card statement for these dates and to confirm when your statement period starts and ends.

Learn More: How do interest-free days work on credit cards?

With a 0% purchase rate credit card, you are charged no interest on purchases regardless of whether you pay off your balance in full. However, like other credit cards, you still need to make the minimum repayments. You can either get a lifetime no interest credit card or a no interest for a limited time.

There are also credit cards with 0% balance transfer offers. A balance transfer is when you transfer your existing credit card balance to a new card. With a 0% balance transfer offer, you are charged no interest on your transferred balance for a limited time.

There are three main types of interest-free credit cards: lifetime 0% interest cards, credit cards with 0% purchase rate offers and credit cards with 0% balance transfer offers.

Lifetime 0% interest cards

Lifetime 0% interest cards have an ongoing 0% interest rate. This means 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. The CommBank, NAB and Westpac credit cards also do not allow cash advances.

When comparing lifetime 0% interest cards, consider the monthly fee and whether you’ll meet the conditions to get this waived. If it’s likely that you will use the card or carry a balance, check whether the monthly fee works out cheaper than taking out a low rate card with no annual fee. It’s important to choose a suitable credit limit based on your spending habits – a higher credit limit means higher monthly fees. Also consider if you are able to make the minimum monthly repayments on-time, consistently, 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. On Canstar’s database, offers currently range from six months 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. This can give you some breathing room to pay off your debt. On Canstar’s database, offers currently range from six to 36 months.

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, your outstanding balance will attract 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 apply. You may be charged an annual fee and a balance transfer fee (a percentage of the amount you transfer to the new card). See the longest 0% balance transfer offers currently available.

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.

Credit cards with ‘0% purchase rate offers’ and ‘0% balance transfer offers’ are only interest free for a limited time. You will be charged interest when the offer period ends.

In comparison, a credit card with a  lifetime 0% interest rate will not charge you interest ever. However, it’s important to note that there could be other fees and charges associated with having a credit card.

You won’t be charged interest on a lifetime 0% interest card. However, you can be charged interest on credit cards with 0% purchase rate offers and 0% balance transfer offers. Here’s when you can be charged interest:

0% purchase rate offers

• If you still carry a balance at the end of the introductory period
• If you make purchases at the end of the introductory period
• If you use the card for things other than purchases, such as balance transfers and cash advances, you will typically be charged the balance transfer rate and cash advance rate respectively

0% balance transfer offers

• If you don’t pay off your balance transfer amount in full by the end of the offer period
• If you use the card to make purchases, you will typically be charged the purchase rate
• If you use the card for cash advances, you will typically be charged the cash advance rate

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

• How long is the interest-free period? The longer the interest-free period, the more time you will have to repay your purchases or balance before the higher rate kicks in. Lifetime 0% interest cards have an ongoing interest-free period, but you may be charged monthly fees.
• What is the revert rate? Also bear in mind 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? Try to find a card with no or low annual fees. With lifetime 0% interest cards, you are charged a monthly fee and it is typically more for higher credit limits.
• Are there any additional features? Check whether the card offers any additional features (like complimentary insurance or the ability to earn rewards points) and whether you think this offsets the fees.

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

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 can have a negative impact on your credit score.