WalletHub, Financial Company
To avoid interest on credit cards, pay the full statement balance by the due date every billing period. Most credit cards have a grace period between when your monthly statement is generated and when your payment is due, and interest won’t accrue during this period if you always pay in full.
You can also maintain a $0 balance by not charging any purchases to your credit card account. There is no revolving balance for a credit card’s interest rate to apply to in either case. Alternatively, you can avoid interest temporarily by getting a credit card with a 0% introductory APR and making minimum monthly payments.
Here’s how credit card interest works:
It’s impossible to owe interest without buying anything. And even a card with no balance reports positive information to the credit bureaus every month. Alternatively, making purchases and paying off the full balance listed on the monthly statement by the due date avoids interest thanks to the so-called grace period that most cards have. That basically means that people who consistently pay their bill in full get an opportunity to do so before interest applies to their purchases.
Interest is most often a concern when you need to buy something now but won’t have all the money for a while. And in that case, the best way to avoid interest is to get a card with a 0% introductory APR. Keep reading below to learn more about that option and other ways to avoid credit card interest charges.
Here's how to avoid interest on credit cards:
- Schedule monthly payments for your full statement balance. As long as you always pay the full balance listed on your monthly statement by the due date, the issuer won’t charge interest. Set up automatic monthly payments from a bank account for the full balance so you don’t need to remember. Just make sure your bank account balance exceeds the amount you charge.
- Don’t make purchases, balance transfers, or cash advances. Not using your card guarantees no interest, as long as you pay any annual or monthly fees it may charge. And the issuer will still report positive information to the credit bureaus each month.
- Use a 0% credit card, and get out of debt before the regular APR kicks in. Lots of credit cards offer 0% intro rates on purchases, balance transfers, or both for a certain number of months after account opening. Your balance won’t accrue interest during that period if you make the minimum payment each month. After the 0% rate expires, the regular interest rate kicks in.
It’s not too hard to avoid interest on a credit card if you know what to do. If you’re in the market for a new card and need to finance a big purchase, getting a 0% card is the best option. If you already have debt, you can move the balance to a 0% balance transfer card and pay it off before the intro period expires. WalletHub’s credit card payoff calculator can help you.
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Mike Brown, Member
Always pay in full before the due date of the month. Also, don't take out any cash.
On the flipside, it's not always good to pay your bills in full, especially if you're applying for new cards. Since utilization doesn't have any history, some lenders will deny you because they can't see how you're using your cards.
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Mike, I disagree. It's fine to pay the card in full every month if you charge something the next month. It will demonstrate you are using the card.
cash advances always accrue interest from the day of the advance. The thing to remember is you need to have a zero balance for 2 billing periods or they get you for some interest