What does 55 days interest free really mean?
Posted October 11th, 2006 and last modified April 24th, 2012The 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.
Featured Westpac Credit Card
The Westpac 55 Day Card offers you a $0 annual fee for the first year. The annual fee is waived in subsequent years if you spend $10,000 or more on purchases in the previous year using your card.
- $0 annual fee for the first year ($30 thereafter) annual fee
- 0% p.a. for 5 months (reverts to 19.59% p.a.) on purchases
- 3.99% p.a. for 6 months on balance transfers
- Cash Advance Rate of 21.49% p.a.
- 55 days interest free
- Paperless eStatements available
- Optional credit card repayment protection
- Increased credit card security with an embedded microchip and protected by CardShield
Read the Westpac 55 Day Credit Card – Special Offer terms and conditions.
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.
- 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.
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:
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.
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When would the next payment be required if I bought something on the 26th of May? Would it be the 19th of July?
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.
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]
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.
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!
[...] How does a balance transfer work and what is it? A balance transfer is the process of moving your balance from one credit card to [...]
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.
everything ok i understood but what if i made the first purchase on april 15 , when my interest will start?
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?