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What is an interest-free period?

Some lenders offer an introductory interest-free period on credit card purchases, or balance transfers. But, all credit cards come with a standard interest-free period. 

Introductory interest-free periods generally have 0% interest on purchases for a specific amount of time. During this time, you’ll still need to make repayments on anything you spend. 

Explore more: What is a 0% credit card for?

A standard interest-free period occurs when you pay off your credit card balance in full each month by the due date. From that point you’ll have a certain amount of days to make purchases where interest won’t be charged, if you make the next repayment in full before the due date. 

Interest-free periods on credit cards can be useful for a number of reasons. These include:

Keep in mind, you should always make sure you can afford to repay anything you spend on a credit card.

How do credit card interest-free periods work?

When you buy something on a credit card, you're borrowing money that will need to be paid back within a certain time. This time period can vary between lenders, however most cards generally have up to 56 days to make a repayment before interest is applied. 

For example, if your credit card billing cycle is 31 days and you make a purchase on 1 October, you may have until 25 November to pay this money back without being charged interest. However, if you make a purchase on 10 October, or 25 October, this would fall into the same billing cycle and still need to be paid on 25 November. 

Always check the billing cycle of your credit card to ensure you don’t miss a repayment as these can vary between lenders.

How can you avoid paying interest on a credit card?

Paying off the full balance of your credit card when it’s due can help you avoid paying interest. There may be the option to make minimum payments, but you should try make the full payment where possible. This is because anything left on your credit card after you’ve made a minimum payment may have interest applied. 

Paying off your credit card in full can also help you avoid building up debt. You may want to look at setting up a Direct Debit or standing order so you don’t miss a repayment. 

It can also be useful to only use your credit card for purchases. Some transactions can carry higher fees and may still incur interest when paid back in the interest-free period on purchases. These can include:

  • withdrawing cash
  • buying foreign currency
  • buying gambling/betting chips

What next?

Before you apply for a credit card, find out more about how they work.

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