How to Avoid 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. To do this, the first step is understanding how credit card interest works, and what you need to do to avoid it.

What Is Credit Card Interest and How Does It Work?

Credit card interest is a charge that may be applied to your credit card balance in exchange for borrowing that money.

When you pay with a credit card, you agree to possibly paying more later in exchange for not having to pay the expense immediately. The longer you go without paying the expense in full, the more money may get added onto your amount owed. The money that gets added on to the expense is the credit card interest.

Ways to Avoid Credit Card Interest

1. Utilize your interest-free grace period

When you make new purchases on a credit card without a balance carried from previous billing periods, those purchases may have a period of time when they don't earn any interest, known as a grace period. Grace periods are the time between the end of a billing period and the payment due date and are typically 20 to 25 days. You can find information about your credit card's specific grace period on your most recent credit card statement.

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

Check the terms of your credit card agreement so you are aware of when the grace period won't apply.

2. Know when the grace period won't apply

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

Balance transfers, for example, 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 purchases, you'll incur interest charges.

3. Pay off your balance in full every month to avoid credit card interest

The best way to avoid interest on your purchases is to pay your entire statement balance monthly within the grace period. This is a great habit to get into and also helps build your credit score through a history of consistent payments.

How to Pay Less Interest on Credit Cards

1. Consider a 0% introductory interest credit card offer on purchases

One way to pay less interest is to take advantage of a 0% introductory APR offer on purchases for a credit card. Look for these offers in the mail or research online to see if there is a card with a 0% introductory interest period that you can apply for.

2. Avoid putting medical expenses on a credit card

While it might be tempting to pay for costly medical bills with a credit card, this can lead to high amounts of interest added to your credit card balance if you don't pay it off by the due date. Since medical bills can quickly become a steep expense, you'll continue to have interest charges until you can pay off your entire balance.

3. Consolidate your debt with a 0% introductory balance transfer card

0% introductory balance transfer cards allow you the opportunity to bring debt from one credit card that is accruing interest over to another credit card with a 0% introductory interest period on that debt. That way, you can put a hold on any interest charges on that debt and have an opportunity to pay it down with more flexibility. There may, however, be a transaction fee for the balance transfer, so review the terms of the offer carefully.

Can you avoid interest on cash advances?

Unfortunately, you probably can't avoid paying interest on cash advances. Unlike credit card purchases , cash advances don't have a grace period and will begin to accrue interest immediately. There also may be a transaction fee for the cash advance.

Cards Offered by Citi

Citi offers several great credit cards, such as the Citi® Diamond Preferred® Card, the Citi Custom Cash Card, and the Citi Simplicity® Credit Card. These credit cards can give you financial flexibility all with unique features and benefits that allow you to make the most out of your credit cards.

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.

Additional Resources

  • Utilize these resources to help you assess your current finances & plan for the future.

  • Learn how FICO® Scores are determined, why they matter and more.

  • Review financial terms & definitions to help you better understand credit & finances.