What does “up to 55 days interest-free” really mean?

When you start making purchases on your new credit card, you’ll receive your monthly statement with a date before which you must pay at least a minimum payment towards your outstanding balance. But if you clear the full balance (rather than making a part-payment towards it), you usually won’t pay any interest at all on your purchases. As such, a purchase made right at the start of your billing cycle could remain interest-free for as much as 56 days.

How to use your interest-free days

1. Make eligible purchases. Your interest-free period applies to purchase transactions, but usually excludes balance transfers, cash advances (using your credit card to withdraw cash or get cash out at the till) and sometimes utility payments and government charges. Interest usually starts to accrue on those types of transactions from the moment they take place.
2. Pay your statement in full. You must clear your entire credit card balance by the payment due date on each statement to be eligible for this interest-free period. Once you have an outstanding balance, the interest-free period no longer applies, and interest will accrue each day on all your transactions, backdated to the date on which you made the purchase.

It’s easy to get confused about this though because many cards also come with an introductory, one-off interest-free promotion. So the card you’re thinking of getting might come with 24 months 0% interest on purchases AND up to 55 days 0% interest on purchases. In that scenario, the 55 interest-free days probably wouldn’t be of interest to you until after your introductory offer had expired.

You can use this guide to find answers to the most common questions about interest-free days, compare credit cards with interest-free days and learn about the key factors to be aware of when using an interest-free card.

The dos and don’ts of interest-free days

Paying your card bill by direct debit

When you get a new credit card, you’ll usually be given the chance to set up a direct debit to make repayments. It’s advisable to do so because it guarantees that you won’t miss a payment, which would get you into hot water with your card issuer and damage your credit record.

You’ll usually be given 2 options:

1. Set up a direct debit to repay the minimum amount payable each month. The minimum payment, as specified in your terms and conditions, is typically a percentage of your outstanding balance or a specified figure – whichever is greater. For example “3% (minimum £5)”. If you only pay the minimum required amount, you won’t benefit from interest-free days and your debt will take longer to clear.
2. Set up a direct debit to repay the full balance each month. This option will allow you to benefit from interest-free days on eligible transactions.

Other key definitions you need to know

When you’re learning about interest-free days, you’ll often come across a number of other terms that relate to this feature. Here are some of the major ones to take note of:

• Statement period/billing cycle. The statement period usually runs for 1 month or from when your last statement was issued to when the next one is issued.
• Statement issue date. This is the date on which the bank issues your monthly credit card statement.
• Payment due date. The date by which you must pay the balance to avoid late charges/fees. If you want to get interest-free days, you’ll usually have to pay your full balance by this date.
• Purchase rate. The interest rate charged on purchases, also referred to as the “standard” rate. Interest-free days help you avoid this cost.

What else do I need to know when using a credit card with interest-free days?

You can use a credit card with interest-free days to save on your account costs when you meet specific requirements. Here are the key details to keep in mind so you can make use of your interest-free days:

• Minimum monthly payments. You usually can’t get interest-free days for purchases if you only pay the minimum amount required on your statement, as most credit cards only offer this benefit when you pay your balance in full by the due date.
• Eligible purchases. Interest-free days are only available for “eligible purchases” made on your card. While this usually includes everyday spending at the supermarket, petrol station, restaurants and so on, exclusions typically apply for cash advance transactions, government payments and some bill payments. Check with your credit card provider for details on what is considered an “eligible purchase” for your card.
• Dates vary. Don’t expect all your credit cards to come with similar billing cycles and due dates. These dates can vary from one card to the next, even when issued by the same card issuer.
• Balance transfers. Usually, if you have a debt on your credit card from a balance transfer, you won’t be eligible for interest-free days on new purchases. If you want to transfer a balance and make purchases without interest, you could also consider a card with an introductory rate of 0% for purchases and balance transfers.

Answers to the most common questions about interest-free days

• How do I receive interest-free days?

  To be eligible to receive interest-free days on eligible transactions, you must repay your account’s outstanding balance in full by the due date on your statement. Usually, you’ll need to pay the full balance for the statement prior to the start of that billing cycle as well as the statement issued at the end of it.

• Why does it always say 'up to' 55/56 days?

  The amount of interest-free days available varies depending on what day of your billing cycle you make the purchase. While you would get the full complement of interest-free days on purchases made on the first day of the billing cycle, you would only get one day interest-free if you made a purchase the day before your statement was issued for that billing period. So “up to” is used to refer to the maximum number of days you can get interest-free in your billing period.

• Is a credit card with interest-free days suitable for me?

  The vast majority of credit cards do come with this feature. If you pay off your credit card balance in full by the due date each month, a card with interest-free days will allow you to make purchases without paying interest. This could be ideal if you use a credit card to earn rewards or for short term cash flow such as spending between monthly paydays. But if you think you might not be able to pay the account’s closing balance in full each month, you may like to consider 0% purchase offer credit cards.

• What is the maximum number of interest-free days I can get?

  The maximum interest-free days you can take advantage of is typically between 50 and 60 days. However, some store cards might give longer for transactions at a specific retailer.

• Do additional cards also get interest-free days?

  Additional cards linked to your primary card generally follow the same billing cycle as the primary card and offer just as many interest-free days on purchases.

• I can't pay my account's closing balance in full this month, but I can in the future. Will I ever get interest-free days again?

  Once you start paying your account’s closing balance in full each month again, you can start making use of interest-free days on purchases.

Bottom line

Credit cards that come with interest-free days give you the ability to make purchases and not pay any interest towards them as long as you clear your full card balance each month. Such cards can come with a number of other features as well, so it’s important that you choose a suitable card for your requirements. Bear in mind that just about every credit card issuer provides cards with interest-free days on purchases, so it is in your best interest to compare as many as possible before making a decision.