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How to avoid credit card interest

If you can't pay off your balance on time, try these options.

If you don’t pay your balance in full by the statement due date, your credit card balance will attract interest and will cause your debt to grow. The more interest you collect, the more difficult it will become to repay your balance. To keep your credit card costs low and your debt under control, here are seven tips you can use to avoid interest with your credit card.

1. Get a 0% purchase credit card

Purchases that aren’t paid by the statement due date will attract the purchase interest rate. Depending on the card, this can range from 9% to 28%. If you are planning on making a large purchase and think you might have trouble paying your balance in full by the end of the statement period, a card with a 0% promotional rate could come in handy.

As this only lasts for an introductory period between six and 18 months, you’ll need to repay your entire balance before the promotion ends. Once the promotion ends, the standard interest rate applies to any remaining debts and future purchases.

If you can’t get a 0% purchase credit card, there are ways you can lower your current rate.

2. Maximize your grace period

All credit cards offer interest-free days after the close of each billing cycle. The number of days offered will vary, but it’s usually between 21 and 25. This can allow more time to pay off your shopping, especially if you time it at the start of your billing cycle.

The most important thing is to make at least the minimum payment, often between 1% and 3%, before the due date. If you don’t, most credit cards may impose a penalty APR of up to 32%. This can last indefinitely and cause you to lose any 0% intro APR period.

3. Repay your balance before the statement due date

This way your purchases won’t collect interest. But if you struggle to repay your balance on time, there are a few things you can do to get your repayments in check. It could be as easy as setting up reminders in your calendar or smartphone. Or you could set up automatic payments to transfer money from your bank account to your credit card each month.

If you struggle to gather enough money to repay your balance each month, you could contact the bank to move your statement due date so it’s closer to your payday. This might help manage your cash flow and ensure you have enough funds to repay your balance and avoid interest.

4. Consider a 0% balance transfer credit card

A balance transfer involves moving your debt from one card to another. With a 0% intro APR period, you can repay your debt without paying any interest for as long as the introductory period is in place, which can be from six to 21 months.

Depending on your balance, this can result in significant savings that could instead go towards paying off your debt rather than paying interest. They’re not entirely cost-free, though. You might need to pay a one-off balance transfer fee.

5. Avoid cash advances

Using your card to make a cash advance will attract high interest. Depending on the card, the cash advance interest rate can range between 26% and 28%. You’ll also be charged a cash advance fee of 3% to 5% of the transaction amount, with a minimum of $5 to $15. Unlike purchases, the cash advance interest will apply from the moment you make the transaction.

Cash advance transactions include ATM withdrawals, gambling transactions, money transfers and other cash equivalent transactions including foreign currencies, gift cards or prepaid cards. You can see Finder’s guide to what is considered a cash advance for more examples.

6. Take out a personal loan

An unsecured personal loan could be an option to help you save money on interest. But it could only work if you have a stellar credit score. That’s because personal loans come with an APR of 4% up to 36%. With a higher credit score, you’re likely to get a loan at the lower end of interest and lower than your current credit card APR. This way, you’ll pay less interest for a loan than you would for a credit card.

7. Take home equity loan or a line of credit

Homeowners have the option to take a loan or a line of credit on the equity of their home. Home equity loans come with a fixed interest rate, while the line of credit comes with a variable rate. This can be often lower than the APR on your credit card and it may cost you less interest to pay off your credit card debt.

However, your home becomes collateral and you could lose it if you fail to pay off your debt. Because of that, this option is not recommended.

Compare 0% intro APR credit cards

Name Product Purchase APR Balance transfer APR Annual fee Filter values
Blue Cash Everyday® Card from American Express
0% intro for the first 15 months (then 13.99% to 23.99% variable)
Earn a $200 statement credit after spending $2,000 in the first 6 months. This is a higher-than-average welcome offer for a card with no annual fee. Terms apply, see rates & fees
Blue Cash Preferred® Card from American Express
0% intro for the first 12 months (then 13.99% to 23.99% variable)
$0 intro annual fee for the first year ($95 thereafter)
Earn a $300 statement credit after you spend $3,000 in purchases on your new card within the first 6 months. Having 6 months to earn a welcome offer is a rare benefit as most cards give you only 3. Terms apply, see rates & fees
Citi Simplicity® Card
0% intro for the first 12 months (then 14.74% to 24.74% variable)
0% intro for the first 21 months (then 14.74% to 24.74% variable)
With an intro APR of 21 months, this card has one of the longest balance transfer offers on the market. Plus, no late fees and no annual fee.

Compare up to 4 providers

Bottom line

All credit cards charge interest if you don’t pay your balance in full by the due date, or if you make cash advances. There are some strategies that can help you keep your card costs low. But some of them come with drawbacks.

Getting a 0% intro APR credit card could be a solid way to go, but make sure you compare all options before you decide.

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