Even though paying your credit card balance in full and on time is the simplest way to avoid interest, there are additional ways to get around carrying debt as a result of interest charges.
Take Advantage of an Introductory 0% APR Promotion
If you know you have some major expenses coming in the near future, applying for a credit card with an introductory 0% APR promotion might be right for you. Credit cards with these promotions allow you to carry a balance month to month without having to worry about accruing interest for a certain period of time.
Terms vary, but these promotional windows typically last anywhere between six and 21 months. After the promotional period ends, you will be charged interest on your remaining balance as usual.
Although a 0% APR credit card may sound enticing, make sure you have a plan to pay off your balance before the promotion ends. It can be tempting to make minimum payments on your balance each month when interest is not part of the picture. But make sure you are chipping away at this balance in its entirety so you don’t accumulate further debt later on.
Consider a Balance Transfer
Similar to a 0% APR credit card, many credit cards offer introductory 0% APR promotions on balance transfers. If you are currently carrying a balance on a credit card that is accruing interest, a balance transfer allows you to move that balance to a new account or credit card. Balance transfer credit cards may offer 0% APR promotions for as long as nine to 21 months, buying you some additional time to pay off your debt without accruing additional interest.
However, there are other considerations to think about before deciding on a balance transfer. First, some balance transfer credit cards do not extend the promotional 0% APR to new purchases. This means that if you continue to spend on this credit card and carry a balance, you could accrue interest.
Second, many balance transfer cards charge an upfront 3% to 5% fee on the balance you want to transfer. In the long run, however, this fee could be negligible to the amount you could save on not accruing interest.
Be Cautious of Cash Advances
A credit card cash advance is a feature offered by many credit card issuers. These are essentially short-term loans in which a customer can borrow cash or a cash equivalent, usually up to 20% to 30% of their available credit limit.
The danger of cash advances is that they begin accruing interest the day they are made, and they do not come with grace periods. Additionally, cash advances often have higher interest rates than purchases. If you are looking to avoid interest charges as much as possible, carrying an immediate balance as the result of a cash advance is not the best idea.
Look Into Auto Pay
If you are someone that worries about forgetting to submit payments on time, enrolling your credit card account for automatic payment may be a good idea. By planning on paying your balance in full each month and enrolling in auto pay, you can guarantee that you will never miss a payment and unintentionally lose your grace period.
Only Put Purchases on Your Credit Card You Can Already Afford
With a large credit line and the delayed payment strategy that comes with the nature of credit cards, it can be easy to charge for something you cannot afford at the moment. By sticking to a personal budget and avoiding overspending, you can set yourself up to pay off your balance each month.
Emergencies can also happen when you least expect it. By not carrying a balance month to month, you can make sure you only need to cover an unexpected expense rather than a larger bill when emergencies arise.
FAQs
Paying the full amount will help you avoid any interest charges. If you can't pay your statement balance off completely, try to make a smaller payment (not less than the minimum payment). Any amount remaining on your statement balance will begin to accrue interest, as will any new purchases charged to the card.
How to avoid being charged interest on a credit card? ›
In most cases, you can avoid accruing interest charges on your credit card by paying off your full account balance by the monthly due date. However, certain transactions will start accruing interest right away, and the charges don't stop accruing until you've paid off the full transaction amount.
What is the best strategy to avoid credit card interest in EverFi? ›
Answer and Explanation:
Reason: A consumer or an individual can avoid paying interest on a credit card by making a full payment every month.
How could you avoid paying interest on your credit card? ›
If you always pay your statement's current balance in full by the payment due date, you'll take advantage of any interest-free days which apply to your card, and avoid paying any interest on the purchases you make.
How to minimise credit card interest? ›
Here are a few other tips to help you minimise interest:
- Pay off as much as you can every month, as soon as you can -- don't wait for the due date.
- Set up automatic payments to pay off your credit card with AutoPay.
- Only use your credit card to pay for things you can afford to pay back.
How to Waive Interest on a Credit Card. The best way to go about asking your credit card company to waive interest charges is to call customer service and explain the situation that caused the interest. Being late on a payment or only paying the minimum amount due will trigger an interest charge, for example.
Is there a way to lower credit card interest? ›
The best way to avoid high interest charges is to pay off your credit card balances every month. If you want to ask your credit card issuer for a lower interest rate, gather info about your credit score, payment history and competing credit card offers before you call.
What is the best strategy for avoiding credit card interest? ›
Ways to avoid credit card interest
- Pay your credit card bill in full every month.
- Consolidate debt with a balance transfer credit card.
- Be strategic about major purchases.
- Use a debt repayment method.
- Make multiple credit card payments per month.
- Tap into savings to pay down debt.
- Consider a personal loan.
As long as you pay off your statement balance in full before the due date, you can continue making purchases on your credit card without paying interest until the next statement due date. Keep paying off your balance in full each month, and you'll keep that interest-free grace period going indefinitely.
How can you avoid paying interest on your credit card quizlet? ›
How do you avoid paying interest on purchases? Pay the bill in full each month.
Either way, paying your statement balance each month by the due date can help avoid interest charges on a credit card.
How to avoid interest on credit card pay statement balance or current balance? ›
You should always strive to pay off your statement balance in full each month by the due date to avoid costly interest charges. It isn't necessary to pay off the current balance before the end of a billing cycle, but doing so can help maintain a low credit utilization and boost your credit score.
How can you avoid paying interest on your credit card explain what happens if you make the minimum payment every month? ›
A credit card minimum payment is the smallest amount due each monthly billing cycle. Paying the minimum on time can help you avoid penalties and fees. But keep in mind that you'll still be charged interest when you carry a balance. Paying your full balance each month could help you avoid paying interest altogether.
How to properly pay off a credit card? ›
How to pay off credit cards in 7 steps
- Stop using your credit cards. ...
- Get a realistic fix on your debt. ...
- Begin the month with a budget. ...
- Make timely payments. ...
- Make more than minimum payments. ...
- Focus on cards with low balances or higher interest rates first. ...
- Request rate reductions.
If you have a credit card balance, it's typically best to pay it off in full if you can. Carrying a balance can lead to expensive interest charges and growing debt. Plus, using more than 30% of your credit line is likely to have a negative effect on your credit scores.
How to avoid credit card fees? ›
The simplest way to avoid interest on a credit card is to pay it off monthly. Paying off your statement balance by the due date will help you avoid interest charges. If you don't pay the entire statement balance, an interest charge is added to your balance and it rolls over to the next month.
Can I ask my credit card company to stop charging interest? ›
There are many important codes of practice in the credit industry. These say that creditors should look at stopping or lowering charges and interest on a debt if you tell them you are in financial difficulty.
Why do I keep getting charged interest on my credit card? ›
Residual interest, aka trailing interest, occurs when you carry a credit card balance from one month to the next. It builds up daily between the time your new statement is issued and the day your payment posts. Since it accrues after your billing period closes, you won't see it on your current statement.
Do I still get charged interest on my credit card if I dont use it? ›
Interest will accrue on a daily basis, between the time your next statement is issued and the due date, which means that you'll have an even larger balance due, even if you haven't used your card during that month.
Do you get charged interest if you pay minimum credit card payment? ›
Credit cards apply interest on your outstanding balance every month. So if you pay only the minimum amount, your outstanding balance will remain high. The interest on the outstanding balance will accumulate month on month, making your debts higher.
