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What does 55 days interest free really mean?

Posted October 11th, 2006 and last modified May 3rd, 2013

The frequently offered 55 interest free days are one of the most popular features of credit cards for consumers.

After all, this feature can save you a lot of money, especially if you pay off your card in full each month. It is like a thank you from the card company, honouring you for being diligent in your payments and giving you something back in return. Many people seem oblivious to the reality behind ‘interest free periods’. Thinking you know the right thing (when it’s completely wrong) can potentially breed disaster.

Commonwealth Bank Low Rate Credit Card

Interest Free Credit Card Offer

The Commonwealth Bank Low Rate Credit Card offers you a low annual fee with a low interest rate offer on balance transfers and purchases.

  • $78 p.a. ($48 for qualifying customers) annual fee
  • 0% p.a. for 5 months (reverts to 12.99% p.a.) on purchases
  • 5.99% p.a. for 5 months on balance transfers
  • Cash Advance Rate of 21.24% p.a.
  • 55 days interest free

Does it really mean you get 55 days interest free for every purchase you make?

No. It means that the maximum number of days you won’t be charged interest for a new purchase is 55 days.

Some credit cards offer 44 days or some other amount. Whatever it is, the specified number of days is the maximum number of interest free days. Let’s explain this concept with a simple example.

Say you had a credit card with up to 55 days interest free and your credit card statement starts on the 1st of every month and ends on the 30th of every month. If you have up to 55 days interest free, your credit card bill will be due on the 25th of the next month. For example:

  • 1st April – first day of the credit card statement
  • 30th April – last day of the credit card statement
  • 25th May – the day your April credit card bill is due

This means that there is a total of 55 days from the 1st of April including the day your bill is due.

Now let’s say you made a purchase of $100 on the 1st of April. No interest will be charged on the amount of the purchase up to, and including, the 25th of May. You get 55 days interest free on the purchase billed to your credit card on the 1st of April.

  1. On the 1st of April you make a purchase of $100. No interest will be charged on the amount of that purchase up to, and including, the 25th of May. You get 55 days interest free on that purchase.
  2. On the 20th of April you make a purchase of $150. No interest will be charged on the amount of that purchase up to, and including, the 25th of May. You get 35 days interest free on that purchase.
  3. On the 30th of April you decide to make a purchase of $200. No interest will be charged on the amount of that purchase up to, and including, the 25th of May. You get 25 days interest free on that purchase.

What does 55 days interest free really mean?



Interest Free Period Graphs

April

View larger image of the April calendar to see details

May

View larger image of the May calendar to see details

You will not get charged any interest on those two purchases if you were able to pay off your total credit card balance of $450 for the month of April.

If you were only able to make a minimum payment of say, $25, then you will be charged interest on the amount left over from April. That is, interest will be charged on $425. The amount of interest charged for your remaining April balance will show up in your next credit card bill.

Top 55 Day Interest Free Credit Cards:

Learn about our information service
Interest rate (p.a.) Balance transfer rate (p.a.) Annual fee Cash advance rate (p.a.)
Commonwealth Bank Low Rate Credit Card
Commonwealth Bank Low Rate Credit Card
A low rate on purchases and balance transfers with a low annual fee. 0% p.a. for 5 months (reverts to 12.99% p.a.) 5.99% p.a. for 5 months $78 p.a. ($48 for qualifying customers) 21.24% p.a. Apply Now For The Commonwealth Bank Low Rate Credit Card
Read More About The Commonwealth Bank Low Rate Credit Card
Westpac Low Rate Card
Westpac Low Rate Card
A low balance transfer rate with a low ongoing purchases rate from Westpac. 0% p.a. for 6 months (reverts to 13.49% p.a.) 3.99% p.a. for 6 months $45 p.a. 21.49% p.a. Apply Now For The Westpac Low Rate Card
Read More About The Westpac Low Rate Card
ANZ Platinum Credit Card
ANZ Platinum Credit Card
A low interest rate offer with overseas travel and medical insurance plus other platinum perks. 19.39% p.a. 0% p.a. for 9 months $0 p.a. annual fee for the first year ($87 p.a. thereafter) 20.99% p.a. Apply Now For The ANZ Platinum Credit Card
Read More About The ANZ Platinum Credit Card
Citibank Clear Platinum Card
Citibank Clear Platinum Card
A credit card with a low rate on balance transfer and purchase with a low annual fee. 0% p.a. for 6 months (reverts to 11.99% p.a.) on purchases. 12.99% p.a. from 1 October, 2013 0% p.a. for 6 months $49 p.a. annual fee for the first year ($99 p.a. thereafter) 0% p.a. for 6 months (reverts to 21.74% p.a.) Apply Now For The Citibank Clear Platinum Card
Read More About The Citibank Clear Platinum Card
Commonwealth Bank Low Fee Credit Card
Commonwealth Bank Low Fee Credit Card
A credit card with a low rate on balance transfer and purchase with a low annual fee. 0% p.a. for 5 months (reverts to 19.74% p.a.) 5.99% p.a. for 5 months $24 p.a. ($0 for qualifying customers) 21.24% p.a. Apply Now For The Commonwealth Bank Low Fee Credit Card
Read More About The Commonwealth Bank Low Fee Credit Card
Bankwest Zero Platinum MasterCard
Bankwest Zero Platinum MasterCard
$0 annual fee credit card with a low rate offer on balance transfers. 17.99% p.a. 0% p.a. for 9 months $0 p.a. 21.99% p.a. Apply Now For The Bankwest Zero Platinum MasterCard
Read More About The Bankwest Zero Platinum MasterCard
Aussie Classic Low Rate MasterCard
Aussie Classic Low Rate MasterCard
A low rate credit card with a low annual fee. 12.49% p.a. 5.99% p.a. for 5 months $0 p.a. annual fee* for the first year ($49 p.a. thereafter) 20.99% p.a. Apply Now For The Aussie Classic Low Rate MasterCard
Read More About The Aussie Classic Low Rate MasterCard
ANZ Low Rate
ANZ Low Rate
Enjoy a low rate on your everyday purchases and balance transfers. 12.99% p.a. 0% p.a. for 9 months $58 p.a. 21.49% p.a. Apply Now For The ANZ Low Rate
Read More About The ANZ Low Rate

Interest free days on credit cards are often misunderstood:

When you fail to pay off your debt in full on any given month, you will lose the privilege of having interest free days, which means you will pay more interest than you thought.

Be sure to make your payment in full by the due date each month and you won’t need to worry. You should also understand that unless you do pay off your outstanding balance by your due date your 55 interest free days will not be granted to you.

55 interest free days are ideal if you pay off your card every month

If you are in a situation where you need extended credit and can’t pay off your balance in full for a few months then you might want to look at other credit card options instead. Compare credit cards to learn which of them suits your current needs best.

The 55 interest free days credit cards are really the best solution for consumers who want to take advantage of paying off their card in full each month by the due date. Using these cards has many other benefits as most of them offer you additional rewards in the form of Frequent Flyer points, or low rates. Either way, make sure you understand what the terms mean for your own financial situation before you sign any contract.

Why does it always say “Up to 55 days”?

Since you could make a purchase anytime in the time between your last statement in your next, it could be any number between 1 to 55. For instance, if your statement and balance was due on the 25th of the current month, and you made a purchase on the 12th, you only have 13 interest free days.

Remember that the days that statements begin, end, and are due depend on the bank’s operations. They will be different from bank to bank.

Hopefully this explanation clears up the confusion about interest free days. Don’t hesitate to leave a comment below if you have any questions or anything to add.

Take a look at of the best credit cards APR to take advantage of interest free day periods on Australia’s leading credit cards.

Whatever card you’ll end up choosing, with a 55 interest free days credit card you can save a lot of money if you stick to the terms.

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12 Responses to What does 55 days interest free really mean?

  1. Default Gravatar
    Fred Schebesta | October 16, 2006

    When would the next payment be required if I bought something on the 26th of May? Would it be the 19th of July?

  2. Default Gravatar
    Tinh | October 18, 2006

    If you purchased something on the 26th of May, it will appear in your May statement. Your May statement will be due around the 24th of June.

    If you purchased something on the 19th of July, it will appear in your July statement. Your July statement will be due around the 25th of August.

    So if you make a purchase in a particular month, that amount will be due the next month by a due date depending on how many interest free days you get.

  3. Default Gravatar
    indula | October 7, 2008

    can the whoever wrote the post explain what does it mean “a new purchase”??

    [Quote]No. It means that the maximum number of days you won’t be charged interest for a ****new purchase*** is 55 days.[Quote]

  4. Default Gravatar
    Peter | January 6, 2009

    If you only paid 95% off the credit card, will you:
    a) lose the 55 days free interest rate from the next due date; and
    b) be charge full interest for subsequent purchase until your credit provider restores the free 55 day period.

  5. Default Gravatar
    Angry | May 26, 2009

    To indula perhaps you should be more appreciative to the person that actually went out of her/his way to help people understand what the topic interest free actually means! People like your self are the ones that makes others in the end give up helping those! To be rude in the way you ask questions from some1 that is helping out for no reason at all is shameless. Ps indula maybe you also need to explain your self better because you cannot really understand your own comment ..and to the person who published this thank you really helped me out i appreciate it!

  6. Default Gravatar
    Margaret | January 8, 2010

    Thank you to the person who wrote and published this information. It was extremely helpful. You have explained it clearly and I now understand why I was charged interest on my credit card despite assuming I had paid off the balance before interest is charged.

  7. Default Gravatar
    masafi | February 22, 2010

    everything ok i understood but what if i made the first purchase on april 15 , when my interest will start?

  8. Default Gravatar
    Banana | September 25, 2010

    I thought I understand, but then
    you wrote

    “if your statement and balance was due on the 25th of the current month, and you made a purchase on the 12th, you only have 13 interest free days.”

    Wouldn’t a purchase on the 12th be part of the next months balance. Wouldn’t it have to be paid by the 25th on the *next* month?

  9. Default Gravatar
    Erin | March 27, 2012

    Hi I need help in understanding what may be the best route for me, I owe $8500 on a credit card( which i would like to cancel as soon possible), and need to know which bank may best suit me, I have searched your sight and have been given advice to look into a Balance Transfer, is this a better option than a Personal loan in the long run, I believe that I can afford to pay at least $500 plus each fortnight,

    Thank you
    Regards

    • Staff
      Jacob | April 8, 2013

      Hi Erin. Thanks for your question and apologies for the delay in getting back to you. The main difference between these two options (besides the rate of interest) is that there are only a couple of institutions that allow you transfer the balance of a personal loan to a credit card (Citibank , Virgin), so if you consolidate to a debt consolidation personal loan, you are bound by the loan term. A consolidation through a credit card by balance transfer allows you to continue rolling the debt once the promotional period has expired.

  10. Default Gravatar
    John | June 18, 2012

    For those that are confused, Yes any purchases in May (Say the 1st of May) would be part of the next statement, and would have 55 interest free days until 25 June… BUT ONLY IF YOU PAID YOUR BALANCE IN FULL FIRST. If you paid the card off to $0.00 on 1 May then your purchase would be interest free until 25 June, if your balance was still outstanding, then even a purchase on 24 May would only have 1 day interest free.

    So basically to reset your interest only days and not pay interest:
    Pay off the balance of the card before the due date
    AND
    1.Pay it off on the 1st day (in the example 1 May) of the statement will give you 55 days interest free (in the example up to 25 June)
    OR
    2. Pay it off on the due date(in the example 25 May) will give you 30 days interest free for purchases before the statement start date (in the example 1 June)
    OR
    3. If you pay it off on the due date (in the example 25 May) do not use it until the start of the next statement period (in the example 1 June) The you would not have to pay it off until the following months due date (25 July).

    Your interest only days ONLY reset after the balance has reached $0.00 so if you had $450 of costs in April, PAID OFF $350 1 May, then SPENT $200 on 24 May, and PAID OFF the $100 left over from the $450 on 25 May, on 26 May you would immediately start paying interest on the outstanding $200 because you never reduced the balance to $0.00.

    My suggestion is to have 2 cards, preferably ones that don’t have an annual fee, then simply alternate the cards each month so you can have the full interest free days.

    Eg:
    Jan:Use card 1
    Feb: Use Card 2, Pay off Card 1
    Mar: Use Card 1, Pay off Card 2
    Apr: Use Card 2, Pay off Card 1
    May: Use Card 1, Pay off Card 2
    Jun: Use Card 2, Pay off Card 1
    etc…

    As long as you can pay off the cards, you don’t have a problem, however if having 2 cards just means you will spend more, I would advise against it.

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HSBC Credit Card
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Commonwealth Bank Low Rate Credit Card
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