One of the major benefits of a credit card is the ability to cashflow your spending. Compare cards that give you up to 62 days interest-free until you need to make the repayment.
55 days interest-free credit cards give the cardholder an interest-free line of credit, provided the account balance is cleared on the due date every month. The payment due date falls approximately 25 days after the end of the billing cycle. The billing cycle is approximately 30 days long.
It does not mean that you get 55 days credit on every purchase.
Purchases made on the first day of the billing cycle do not have to be paid for (i.e. cleared from the account) until 55 days later. Purchases made on the last day of the billing cycle do not have to be paid for until 25 days later. So the maximum interest-free credit period for any transaction is 55 days, and the minimum is 25 days.
Pay off your account balance in full on the due date to avoid ever paying interest. Make a diary note of the due date, or set up a reminder on your computer or phone, or organise a direct debit from a bank transaction account.
Try to organise the bulk of your purchases and monthly bills so that they occur near the beginning of your credit card billing cycle, to maximise the number of interest-free days that you receive.
No. Many credit cards have only 44 days interest-free. Cards with up to 44 interest-free days offer 132 fewer interest-free days every year. If your average monthly purchases are $2,000 and you keep your cash in a 4% mortgage offset account, those extra 132 days are worth $29 per year in saved interest cost. Before you apply for a new card, check to see how many interest-free days it has.
No. Having an unpaid balance transfer on your card means that you will forfeit your interest-free days. Interest will be applied to any purchases you make, from the transaction date until they are finally cleared from your account. The same rule applies to any kind of unpaid credit card balance, unless there is an introductory zero-interest offer on purchases in place.
Essentially, no. If you always carry credit card debt from month to month, you’d be better off looking for a card whose primary feature is a low ongoing purchase interest rate. However, you may be able to combine both features – low interest and 55 days – in a single card, ready for the day when you finally clear your debt.