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.
Interest Free Credit Card Offer
The NAB Low Rate Credit Card offers you a low annual fee with a low interest rate offer on purchases.
- $59 p.a. annual fee
- 0% p.a. until 1 July 2014 (thereafter 13.99% p.a.) on purchases
- 4.99% p.a. for 6 months on balance transfers
- Cash Advance Rate of 21.74% 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 video.
Click here for video transcript:
Hi, I’m Fred Schebesta. I’m here to explain to you what does up to 55 days interest free actually means on your credit card. The first thing is, I want to talk about 55 days. Now, 55 days here, there’s actually a little line that goes before that and it says ‘up to 55 days interest free.’ Now when it says up to, what that mean is, is that it’s up to potentially the date that your statement arrives.
Now I’ve got a bit of a diagram that I want to explain it to you in some concepts. Now the first thing is, you’re not going to get interest free days if you have a balance. If you have a balance, you just can’t get interest free days, it doesn’t work that way.
The other thing is that, some cards offer potentially 44 days interest free or some have actually no interest free days, so it’s worth checking your card and comparing. When it comes down to it, this core concept of, ‘when is your payment due’. When your payment is due, this is when you have interest free days up to. So I want to take you through an example here. Now, what I’ve drawn out here is a diagram where we have month one, month two and month three. And let’s just say that you get your statement on the 30th of the month. So we’ve just said here that we have three different statement dates. let’s pretend, on the first day of the month, on potentially on this seventh day of the month, you make a purchase. On that day, you will have 23 days interest free, and let’s say you have a 55 days interest free card, you will get another 25 days interest free. So in total, this purchase on the seventh will actually give you 48 days interest free. This here is your actual payment due date, and that is when you must clear your balance to keep getting interest free days.
Let’s just say for example, you were to make a purchase on the very last day of the month, say on the 30th here, obviously it’s the last day of the month, you would only get the 25 days interest free. So you can see it’s all about when is your payment due date and when is your statement date.
Now the next one is a little bit of a more intense concept – I just want to take you through this. Say you were to make a purchase, here, on the 8th day of the month. Now that purchase there, would not be due on your payment due date, but instead you will get the interest free days, so the 22 days here, and the 25 days here, on the payment due date. On the 8th, you will get 47 days interest free. So it’s all about when is your statement, when do you make a purchase and when is your payment due date. Remember, you must clear your balance on your payment due date, otherwise these purchases here will not get interest free days. So, it’s important to compare if you have interest free days, and you can do that at http://www.finder.com.au, and I hope that’s helped you out with your 55 days interest free.
What does 55 days interest free really mean?
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.
- 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.
- 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.
- 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.
Top 55 Day Interest Free Credit Cards:
Interest Free Period Graphs
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.
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.
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.