How to Avoid Interest on Your Credit Card

If you’re looking to minimize interest, here’s some information that can help you understand how credit card interest works and how you can avoid it.

What is credit card interest and how does it work?

Credit card interest is essentially the price you pay for borrowing money with your credit card. The interest rate is usually listed as a yearly rate called the annual percentage rate or APR.

Different types of transactions tend to come with different APRs. For example, your purchase APR will likely be different from your cash advance APR. Different types of transactions also come with different rules as to when interest is charged, so it’s important to check your cardholder agreement for specifics.

Ways to avoid credit card interest or pay less in interest

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 when they don't accrue interest called a grace period. Grace periods are the time between the end of a billing cycle and the payment due date.

Pay off your balance entirely within the grace period, and you can avoid paying any interest on 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 to find out what the grace period is and under what circumstances it applies.

Not every type of transaction gets a grace period. Balance transfers, for example, will typically not qualify for a grace period. Neither will cash advances.

Consider a low introductory APR credit card offer on purchases

One way to pay less interest is to take advantage of a low introductory APR offer on purchases. Cards with a low intro APR on purchases offer the low rate for a set period. Once the period ends, you’ll start accruing interest at the credit card’s regular APR for purchases on any purchase balance that remains as well as new purchases.

Consider consolidating debt with a low introductory APR balance transfer offer

A balance transfer lets you move a balance from one credit card to another.

Taking advantage of a low intro APR on balance transfers can give you a chance to pay off existing debt while accruing less interest. Once the introductory period ends, you’ll start accruing interest at the credit card’s regular APR for balance transfers on any remaining amount of the balance you transferred.

There may be a balance transfer fee for each balance you transfer (typically a percentage of the balance transferred or a dollar amount, whichever is higher). So, review the terms of the offer carefully..

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

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