6 Smart Ways to use Interest Free period in Credit Cards

Smart Ways to use Interest Free period in Credit CardsSmart Ways to use Interest Free period in Credit Cards

Credit Cards come with quick access to money with various features for shopping, making online purchases, cash withdrawal etc without having money in our bank account. Credit Card comes handy in case of emergency. It provides interest free period upto 50 days for such purchases made on Credit Card. However, if you should know about interest free period so that you can use them in smart way. In this article, I would provide some facts about interest free period on Credit Cards and smart ways to use interest free period on such Credit Cards.

6 Smart Ways to use Interest Free period in Credit Cards

1) Undersand Interest Free Period

Many of us do not know how much interest free period your credit card gives. Generally, your credit card statement comes every month and you need to make payment of credit card bill within 20 days of bill date. Means, you would get interest free period for 20 to 50 days (30 days billing period + 20 days of free period after billing generation date).  

Let me explain with an example. My Citibank credit card bill is from 26th of the month to 25th of the subsequent month. If I got bill for period 26th Sep to 25th Oct, I need to pay my credit card bill only on 15th November. Affectively, I can use free period from 25th Sep to 15th November, 2015 (50 days). Understanding this fact would help you to plan your expenses on credit card so that it would hit your budget negatively.

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2) Plan high value purchases during beginning of the credit period

If you are planning for shopping during festivals for any high value items, best way is to buy during beginning of the credit period.

In the above example, I can plan and buy high value items like TV, Refrigerator, Airconditioner etc., during 1st week of my billing period i.e. 26th of the month to 30th / 31st of the month. This way, I would pay bill only after 45-50 days (purchases done on 26th Sep, payment to be done by 15th November).

3) Have more than one credit card and play with them

Another smart way to affectively use interest free period on credit card is holding more than one credit card and with different billing cycles. You can purchase / shop online / use credit card during 1st or 2nd week of your biling cycle of your credit cards and enjoy interest free period to maximum extent.

Let me explain with another example. If you have credit card no.1 where billing cycle is 26th Sep to 25th Oct of the month. Credit card no.2 billing cycle is 16th Sep to 15th Oct of the month.

Now, when you are making purchases / shopping online, use credit card no.1 for purchases made between 26th to 15th.

You can use credit card no.2 for purchases done between 16th to 25th of the month. This way you are using interest free period and getting maximum benefit.

4) Say NO to minimum payment

This is biggest mistake one would make. You would get tempted with minimum payment written on your credit card. If you make minimum payment, you would be exempted from credit card default or late payment charges, however interest would be computed from day-1 of your transaction.

Let me explain with an example. If you have purchased Airconditioner for Rs 50,000 on 26th September. Your credit card bill would be for period 26th Sep to 25th October and you need to pay payment by 15th November. Now if you think that you would pay minimum payment by 15th November, on your credit card, your next bill would get charged for interest for your Airconditioner from 26th September, to 26th November i.e. 60 days period. Interest rate would be anywhere between 18% to 24% per annum or more. Avoid paying minimum payment charges and see you always make full payment of credit card bill.

5) Minimum payment – No interest free period for new transactions

Many of us do not know about this fact. If you just make minimum payment on your credit card for any of the month, many banks charge interest for all new transactions. Means, you are literally loosing the interest free benefit on your credit card.

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6) Make early or online payment before due date

Do you know that one day delay in credit card payment is as good as not making payment for your credit card bill for that month. Late payment charges and interest for the purchases made would be charged on your credit card from day-1. Make online payment on or before the due date of the bill. If you are making payment through cheque, you should drop it atleast 3 working days before the due date of the credit card bill. This way you would avoid delay in getting your cheque credited in your credit card account.

Readers, what are your views about these tips? Do you feel there are any other ways where you can use interest free period on credit card effectively?

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Smart Ways to use Interest Free period in Credit Cards

Suresh KP


  1. i would like to add one more
    pay minimum amount due before due date and total amount due on due date.
    coz there is an rbi rule which states that there must not be any extra charges if full amount is paid before next bill . correct me if i am wrong. in my experience psu bank credit cards follow this rule , but pvt players ….

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