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Understanding interest-free days:

How to avoid paying interest on credit card purchases

Let’s face it, no one likes paying interest – so here’s some good news. If you have a credit card with interest-free days, and you pay off your balance in full each month, you could avoid paying interest on purchases made with your card.

What are interest-free days?

You can think of them as a period of time when you won’t be charged interest on purchases you make with your card. In other words, they give you access to a short period of interest-free credit – as long as you pay off your balance in full by the due date.

Below, we explain how interest-free days’ work. While it can be confusing, the key thing to remember is that interest-free days only apply if you pay off your balance in full each month. If you don’t, you’ll pay interest on purchases made with your card (more on this later). That’s why paying off your full balance by the due date, if you can, is the best way to avoid paying interest.

How many interest-free days do you get?

It depends. Some cards have up to 44 interest-free days, some have up to 55 interest-free days, some have a different interest-free period, while some cards have no interest-free period at all. If you’re not sure what your card offers, check your credit card conditions of use or contact your provider.

What does the ‘up to’ mean?

The ‘up to’ is important. If your card has up to 55 interest-free days, that doesn’t mean you get 55 interest-free days on every purchase. It depends on when you make the purchase.

For example, the interest-free period on purchases generally runs from the beginning of your statement period (you can find your statement period at the top right of an ANZ statement). Let’s say your statement period begins on the first of the month and you have a zero balance. The diagram below shows:

  • If you bought milk on the first of November, you’d get 55 interest-free days on that purchase provided you pay off their current statement balance in full by December 25th (the due date).
  • However, if you buy milk again on November 10, you’d get 46 interet-free days on that purchase.
  • And, if you bought milk again on November 25, you’d get 31 interest-free days on that purchase. 

Remember, it’s “up to” 55 days, not 55 days for every purchase. 

 

This example is for illustrative purposes only and may not reflect the terms of your credit card.

What if you don’t pay off your balance in full by the due date?

At ANZ, to get the benefit of interest-free days on purchases, you need to pay off your balance in full by the due date. If you don’t, you’ll pay interest on your purchases from the day you make them. You’ll also lose the benefit of interest-free days for at least the next statement period. That’s why we recommend always paying off your balance in full each month, if you can.

To regain your interest-free period on purchases, you’ll need to pay off the full balance by the due date in a subsequent statement period.

What about cash advances?

It’s important to remember that there is generally no interest-free period for cash advances with your credit card. If you make a cash advance from your credit card account, you’ll pay interest on it from the date of the cash advance. That’s why we recommend you use your everyday account for cash withdrawals instead.

To find out whether interest-free days apply and how they work for your card, please check your credit card conditions of use or talk to your bank or card provider.

Information in this article refers to personal credit cards, is general in nature only and does not take into account your personal objectives, financial situation or needs.The information may not reflect how interest and charges are calculated under your credit card conditions of use.

By providing this information ANZ does not intend to provide any financial advice or other advice or recommendations. You should seek independent financial, legal, tax and other relevant advice having regard to your particular circumstances.

The information is current as at August 2020 and may be subject to change. ANZ recommends you review your personal credit card conditions of use for information about the terms that apply to you.

Interest rates are subject to change.

Lending criteria, terms, conditions and fees apply to all ANZ credit cards. See Rates, fees and agreements for more information