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Paying the Full Balance

How to avoid interest costs by paying your credit card balance in full each month.

Some people never think about paying the full balance on their cards because they believe that paying credit card interest is expensive but also inevitable. Fortunately with the inception of ‘Interest-free Day’ periods, it’s possible (and easily achievable) to never accumulate interest on your credit card purchases. That being said, many credit card owners do not fully understand what the credit card company means when they say interest-free days.
Be sure, that there is a trick to using these interest-free days effectively. You have to be just as savvy with your finances as the credit card companies are with their charges. See, they are smart enough to use words like, “up to 55 interest-free days” by sliding in that phrase it lets you think you have all of those days free of interest when in reality the interest-free only applies to you if you meet their requirements, the main one being paying off your full balance each month. See some of the leading 55 days interest-free credit cards.

Comparison of 55 days interest-free credit cards

Rates last updated September 29th, 2016.

American Express Platinum Edge Credit Card

Standard 10,000 bonus points offer has replaced the 30,000 bonus points exclusive offer.

September 1st, 2016

Commonwealth Bank Business Platinum Awards credit card

First year annual fee waiver has been extended until 31 October 2016.

September 2nd, 2016

Commonwealth Bank Business Interest Free Days credit card

First year annual fee waiver has been extended until 31 October 2016.

September 2nd, 2016

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Jonathan Choi Jonathan
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
ME Bank frank Credit Card
Enjoy a low and consistent interest rate on purchases and cash advances, combined with no annual fee.
11.99% p.a. $0 p.a. Go to site More info
American Express Essential Credit Card
Receive a $50 credit on eligible spend and get Smartphone screen insurance combined with a no annual fee for life card. Also enjoy a 0% p.a. balance transfer rate for 12 months.
14.99% p.a. 0% p.a. for 12 months with 1% balance transfer fee $0 p.a. Go to site More info
St.George Vertigo Visa
Introductory offer of 0% p.a. for 18 months on balance transfers and 1% p.a. for 12 months on purchases, plus a low annual fee.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
HSBC Platinum Qantas Credit Card
Receive 60,000 bonus Qantas Points on eligible spend within 3 months. Enjoy access to premium benefits and complimentary insurance.
19.99% p.a. $199 p.a. Go to site More info
Bank of Melbourne Vertigo Visa Credit Card
Enjoy a low annual fee combined with 0% p.a. balance transfer offer for 18 months and 1% p.a. for 12 months on purchases.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info
ANZ Platinum Credit Card - Exclusive Offer
Receive $200 back when you spend $500 in the first 3 months. Also enjoy a $0 annual fee for the first year.
19.74% p.a. $0 p.a. annual fee for the first year ($87 p.a. thereafter) Go to site More info
Westpac Low Rate Card
A no frills credit card with an introductory rate of 0% p.a. for 18 months on balance transfers and 1% p.a. for 12 months on purchases.
1% p.a. for 12 months (reverts to 13.49% p.a.) 0% p.a. for 18 months $59 p.a. Go to site More info
Citi Clear Platinum Card
A low rate platinum credit card with a low interest rate on purchases and balance transfers.
0% p.a. for 9 months (reverts to 14.99% p.a.) 0% p.a. for 9 months $99 p.a. Go to site More info
28 Degrees Platinum MasterCard
Benefit from no international transaction fees on purchases, no currency conversion fees and no annual fee.
21.99% p.a. 4.99% p.a. for 6 months $0 p.a. Go to site More info

Why should I pay the full balance monthly if I get 55 days interest-free?

  • Although you gain ’44 or 55 days interest-free’ on most credit cards, it comes with a catch: You must pay your full balance each month to redeem it. In theory, it almost doesn’t make much of a difference whether you have 44 or 55 days, as you have to repay your balance in full every 30/31 days.
  • Coupled with a low fee credit card, the only fee you’ll have to pay on your credit card is the annual fee.
  • The most popular credit card category that is used in conjunction with interest-free days are low interest rate credit cards. Even if you exceed the grace period, you will not have accumulated much interest.
  • In essence, if you get a card that has a low annual fee, and you pay your balance off each month it will only cost you that low annual fee amount each year. That could be even less if you manage to swing a no annual fee credit card.
  • The exception to this lies in certain transactions, especially those deemed cash advances. Cash advances are usually not eligible for interest-free days and will start gaining interest immediately. The best way to avoid this cost is to avoid cash advances whenever possible.

Paying your full balance monthly gives you something you can almost never get, free loans. When you think about it you realise that spending on a credit card is really just borrowing money for the short term. When you pay that money back each month you have borrowed it for free. In addition, if your card offers rewards you can actually get something for nothing. Just be careful about your spending because it is easy to overspend on plastic. Never spend more than you make and pay off your balance each month to truly benefit from credit card ownership.

Compare low interest rate credit cards

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6 Responses to Paying the Full Balance

  1. Default Gravatar
    Sally | April 29, 2016

    I’m still confused about paying the full balance. If I have 62 days interest free (Coles Low Rate card) if I pay the full balance off, don’t I technically only have a month, as I have to pay the whole amount by the time the bill is due? How would I truly get 62 days interest free?

    • Staff
      Anndy | May 3, 2016

      Hi Sally,

      Thanks for your comment.

      To better understand the concept of interest-free days, I would like to refer you to this page. It contains a video and a graphic presentation that discuss interest-free days in full details.

      Cheers,
      Anndy

  2. Default Gravatar
    Kathy | June 25, 2013

    Which credit card is best with lowest annual fee, qantas frequent flyer points and travel insurance and extended warranty if i pay off every month?

    • Staff
      Jacob | June 25, 2013

      Hi Kathy. Please have a look at our frequent flyer comparison page. You can sort the cards by their annual fee, rewards per dollar spent and by whether they have a balance transfer promotion. Most of these cards offer complimentary international travel insurance; however, please check the product table on the review page to see whether this benefit is included with the credit card. If you have any questions about the cards on this page, please ask us. Thanks for your question. Jacob.

  3. Default Gravatar
    Vick | April 26, 2013

    Hi my commonwealth card is cancelled by my bank because I was over seas and didn’t pay repayments. I also lost my job on that time but now I’m ready to pay all instalments. Is there any way they can issue me credit card again or will it effect on me in future?

    • Staff
      Jacob | April 26, 2013

      Hi Vick. Thanks for your question. You will need to discuss your options with a lender. You may also want to get a copy of your credit file. It’s not the case that when you’re ready to make repayments you can reapply for a card, the fact that you defaulted in the past is going to have a negative impact on your chances of getting another credit card. Jacob.

Credit Cards Comparison

Rates last updated September 29th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Enjoy a 0% p.a. balance transfer offer for 18 months and also earn 2 bonus Velocity Points in the first 3 months on everyday spend.
20.74% p.a. 0% p.a. for 18 months $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
ME Bank frank Credit Card
Enjoy a low and consistent interest rate on purchases and cash advances, combined with no annual fee.
11.99% p.a. $0 p.a. Go to site More info
St.George Vertigo Visa
Introductory offer of 0% p.a. for 18 months on balance transfers and 1% p.a. for 12 months on purchases, plus a low annual fee.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info

* The credit card offers compared on this page are chosen from a range of credit cards CreditCardFinder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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