Interest free days vs No free days
Credit Cards can be a useful tool as an emergency backup, but to use them to your full advantage it is vital to have a good understanding of how credit card interest charges.
Cards usually come with either “up to x days” interest free on purchases, or a no interest free period. So what’s the difference?
To use our cards as an example, we have an “up to 55 days interest free” card (Visa Classic) and a Low Rate Visa card with no interest free days on purchases. The Visa Classic allows you to potentially have 55 days of no interest charged on a purchase if you pay the full balance of all purchases owing every month. But, be aware. It doesn’t mean you get 55 days interest-free from the moment you buy something. The “55 days” refers to from the start of your statement cycle to your statement’s due date. So if you buy something on the day your statement cycle starts you will have 55 days interest free until your next statement bill is due (as long as you pay it in full). If you buy something 10 days after the billing cycle you will get 45 days interest free, and so on. So you could get between one day interest free, and a maximum of 55 days interest free.
The main advantage with this type of card is that if you pay your balance owing in full every month, you are getting an interest free revolving credit fund. But if you don’t pay your bill in full each month, interest charges will apply on items from the date of purchase.
Our Low Rate Visa on the other hand, calculates interest from the day you make a purchase until you pay it off, however the interest rate is considerably lower than the interest free period card. This type of card is a big advantage if you are not able to pay your balance owing in full every month.
All credit card statements include a repayment table which outlines the interest and time frames anticipated when only paying the minimum repayment on your account.
This is a great indicator of the true cost of your card, so keep this in mind when making large purchases that you can’t repay in full at the end of the statement period.
Cash advances (withdrawing cash from your credit card) aren’t considered a purchase so no interest-free days apply, no matter what type of credit card you have.
Speak to our lending officers on 1300 65 65 81 or enquire now to get the card that best suits your needs today.