How do interest free days work?

You might see credit cards offering an interest free period – but what does this actually mean? And how can you make the most of it? Let’s take a closer look.

What are interest free days?

It’s a time in your statement cycle where you can buy things without being charged purchase interest.

Most credit cards offer an interest free period up to a certain amount of days – with us it’s up to 44 or 55 days, depending on the card type. Statement cycles are around 30 days and we allow you 14 or 25 days to make your repayment. If you add these two periods together, you get the maximum number of interest free days available.

To be eligible, you need to pay your closing balance (excluding any balance transfer amount) in full by the due date each month.

How are they calculated?

The actual number of days you’ll get depends on when you make your purchase in your statement period – this is why you’ll always see ‘up to’ before the maximum number of days.

Let’s say you have a credit card with up to 55 days interest free on purchases.

As long as you paid your full closing balance the previous month, you’ll get the full 55 days interest free on any purchases made on the first day of your statement period, 54 on the second day and so on. If you buy something on the day your statement period ends, you’ll get 25 days interest free. The earlier you make the purchase, the more interest free days you’ll get.

What if I miss a full payment?

If you pay less than your closing balance, you won’t be eligible for interest free days during that statement cycle. And you’ll be charged interest on the outstanding balance – this will appear on your next statement.

You can get your interest free perks back in your next statement cycle by paying down your closing balance by your due date.

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Things you should know

The information contained in this article is of a general nature and is not intended to be nor should it be considered as professional advice. You should not act on the basis of anything contained in this article without first obtaining specific professional advice. To the extent permitted by law, Bankwest, a division of Commonwealth Bank of Australia ABN 48123123124 AFSL / Australian credit licence 234945, its related bodies corporate, employees and contractors accepts no liability or responsibility to any persons for any loss which may be incurred or suffered as a result of acting on or refraining from acting as a result of anything contained in this article.