How to avoid paying interest on your credit card

For the savvy credit card user, it's possible to take advantage of the perks and rewards of using credit cards while avoiding credit card interest. In order to do this, the first step is understanding how credit card interest works, and what you need to do to avoid it.

Utilize your interest-free grace period

When you make new charges on a credit card with no balance, they have a period of time when they don't earn any interest known as a grace period. Grace periods are typically 20 to 25 days, although you can find information about your credit card's specific grace period on your most recent credit card statement.

Pay off your balance completely within the grace period and you can avoid paying any interest on your credit card. However, this only works if you pay off your statement balance in full each month by its due date.

Be aware of when the grace period won't apply

Your grace period might not apply to every kind of credit card transaction.

Balance transfers will not qualify for a grace period. To pay less interest on a balance transfer, a reliable method is to find a great low intro APR offer for balance transfers.

Grace periods also don't apply if you have any balance from the previous month. Even if you pay off new charges within the grace period, you'll incur what's known as finance charges, which will result in interest in the following month.

Pay off your balance in full every month if you want to avoid credit card interest

The best way to not pay interest is to pay your full statement balance every month within the grace period. This is a great habit to get into and will not only help you avoid paying interest but will help build your credit score through a history of consistent payments.

Consider a low introductory interest credit card offer

One way to pay less interest is to take advantage of a low introductory APR offer for a credit card. Look for these offers in the mail, or research online to see if there is a card with a low introductory interest period that you can apply for.

Can you avoid interest on cash advances?

Unfortunately, you probably can't avoid paying interest on cash advances. Unlike typical credit card charges, cash advances don't have a grace period, and will begin to accrue interest immediately. You can avoid interest if you pay the cash advance charge the same day it's withdrawn, but that's an unlikely outcome, because if you could pay off the cash advance you probably wouldn't withdraw it to begin with.

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.