INTEREST-FREE PERIODS

CREDIT CARDS Bank credit cards usually have 55 interest-free days. But that doesn’t apply to all purchases and it’s also not always 55 days. It works like this: ▶ It’s generally applicable only to over-the-counter purchases. Buying petrol, drawing cash from your credit account or transferring money from it usually incurs immediate interest. ▶ The interest-free period usually starts on the first day of your account statement cycle and ends on the date your payment is due. For example, the statement cycle is 30 days, plus 25 days until the due date.

Let’s say you bought something on day one of an account statement cycle. You’ll have 55 days to pay it off before interest is charged. A purchase made on the second day of an account statement cycle will give you 54 days interest-free, and a purchase made on day 40 of the cycle will give you 15 days interest-free. ▶ Example: You buy something for R500 on 1 September. No interest will be charged on this amount until 25 October.

On 10 September you spend R200 on your credit card. No interest will be charged until 25 October – as you’re getting 45 days interest-free on that purchase. ▶ It can be difficult to keep track of when you bought what and how long each purchase’s interest-free period is.

On your bank statement there should be a payment due date. You should pay the full closing balance by this date – not just the minimum repayment – or you’ll be charged interest. STORE CARDS Chain stores often offer an option of six months interest-free credit, but here’s what you need to know about that: ▶ The six interest-free months are applicable only if you pay the full monthly instalment every month. You’ll receive a statement reflecting how much your instalment is and by which date it has to be paid. ▶ Even if you’re on the six-month interest-free plan, you’ll be charged interest if: your payment is less than the required instalment; you miss a month’s payment; or you pay too late – which means even if you pay one day later than the due date on your statement it’s too late. ▶ The interest-free option is also available only to consumers with a good credit record. If you have a bad record, you’re considered high risk and you’ll probably be offered only store cards that charge the maximum allowed interest rate. * Correct at the time of going to print.