Interest free daze
Credit card users are counting down the days, writes
CREDIT card holders are being urged to check the interest- free days offered by their cards to avoid getting stung by fine print.
While the most common number of interest- free days is 55, several big banks now have credit cards with 44 days, and a new analysis by comparison website RateCity has found that interest- free days on offer range from zero to 62.
RateCity spokeswoman Sally Tindall said the seemingly straightforward perk had a few big traps.
“Don’t assume your card has interest- free days. There are five credit cards on the market that have none, which means you’ll be paying interest from day one,” Ms Tindall said.
Consumers should find out how many interest- free days they had and how that worked with their monthly statement cycle, she said. “Say you have a 55- day interest- free card. On day one of your statement cycle you’ll get 55 days, but on day 30 you’ll only get 25.”
Ms Tindall said if people had money owing on their card their interest- free days would disappear, and taking money out at an ATM was classified as a cash advance that was charged interest straight away.
“One of the biggest traps customers fall into is repaying the minimum balance thinking that’s enough. Not only will you lose your interest- free days, you’ll also pay through the nose in interest,” she said. “The only way to avoid interest on your credit card is to pay the total every month.” Beyond Bank Australia is one of just four lenders offering up to 62 days interestfree on credit cards, and its general manager customer experience Nick May said consumers should check their card’s terms and conditions to make sure their current deal worked for them. “There are lots of moving parts and credit cards are highly competitive products,” he said.
“The most common mistake people make is missing the words ‘ up to’.
“Most credit card payments are due at the end of a cycle, usually in line with a statement, so it’s not always the same number of days interest- free for every transaction – it depends on when you made the purchase as to how many interest- free days you will receive for that transaction.”
Mr May said people should take advantage of technology to be organised. “Whether it be setting yourself a reminder in your diary or calendar or, even better, setting up a regular payment so that the payment to the card happens automatically each month – it’s set and forget,” he said.
“The payment will always be due at the same time, so there’s no excuse.”