How to Avoid Interest on Your Credit Card
At some point, many of us will need to carry a balance on our credit cards, whether due to unexpected expenses like car repairs or medical bills, or during periods of reduced income. While this financial flexibility can be a lifesaver, credit card interest rates are often quite high, making it essential to minimize the interest you pay.
Understanding Your Credit Card’s Grace Period
The key to avoiding interest charges lies in understanding and utilizing your card’s grace period. A grace period is the time between the end of your billing cycle and your due date during which you can pay off your balance in full to avoid interest charges. Most credit cards offer a grace period of about 25 days.
As long as you pay your entire statement balance by the due date, you won’t incur interest on any new purchases made during that billing cycle. However, this grace period typically applies only to new purchases; any existing balances will continue to accrue interest until they are fully paid off.
Tips for Using Your Grace Period to Avoid Interest
- Make Timely Payments: Ensure you pay your credit card bill on time every month to maintain the grace period. Missing a due date can forfeit the grace period on new purchases until the total balance is paid off.
- Pay the Full Statement Balance: To benefit from the grace period, always pay the full statement balance. Paying anything less, even a small amount, can negate the grace period.
- Set Up Automatic Payments: Consider enrolling in automatic payments from your bank account to avoid missing due dates and losing the grace period. Just be aware that while most automated payments are helpful, some might come with potential costs.
- Monitor Your Account: Regularly check your account online to review current billing cycle purchases. Remember, new charges won’t qualify for the grace period until the next statement period.
- Use Introductory 0% APR Cards for Large Expenses: For significant upcoming expenses that you need to pay over time, consider opening a new credit card with an introductory 0% APR period instead of sacrificing your existing card’s grace period. This can help you manage large purchases without incurring interest. Here are some of the best 0% intro APR cards to consider.
The grace period is a powerful tool for avoiding interest charges if used strategically. By staying on top of your monthly due dates and paying your statement balance in full, you can effectively carry purchase balances interest-free from one grace period to the next.
