How to Avoid Credit Card Interest

Chelsy Meyer  | 

There are a lot of different ways to use a credit card, but some ways are financially more responsible than others. Credit cards offer a lot of perks, including the security of having it in case of an emergency, gaining certain rewards like airline miles, and improving your credit score through regular, responsible use.

With the positives come the negatives. Credit cards also tend to come with high interest rates, applied late fees, and the ability to get yourself into credit card debt. To avoid many of those negatives, it’s important to know how to steer clear of high interest payments. However, there is a difference between avoiding accruing interest, and avoiding paying your interest payments.

How to Avoid Credit Card Interest

Being able to avoid credit card interest means getting the absolute most out of your credit card perks, and understanding how your credit card works. Avoiding credit card interest just means adjusting how you use your card, make your payments, and understanding your grace and interest-free periods.

Never Carry a Balance

This tactic involves taking a very specific approach to your credit card use. If you only spend on your credit card what you have in liquid cash value, you should never have to carry a balance. Especially for those who may have received a credit card despite bad or poor credit, using your card this way can help avoid the high interest rates that come with a credit card and a history of poor credit usage. Make your purchase and pay it off right away and you should be able to avoid accruing interest at all.

Treat Your Credit Card Like a Debit Card

Never carrying a balance involves paying down your balance before interest or fees kick in. Treating your credit card like a debit card involves charging your credit card only when you have cash on hand. You wouldn’t — or shouldn’t — overcharge your debit card if your balance cant handle it, so you should carry that principal with you in terms of your credit card use. Using your card this way will help your credit score while avoiding any interest charges.

Understand Your Credit Card Grace Period

Understanding the grace period on your credit card it vital in keeping your balance low and avoiding interest payments. Your grace period is the time between the end of your billing cycle and the due date for that cycle. However, in most cases, your grace period only works if you consistently pay your balance by that time each month. If there’s a balance at all, your grace period is lost, and your purchases are now accruing interest. Until your balance is paid, your grace period has been lost.

Keep Track of Your Interest-Free Period

Many cards offer interest-free periods, which are really helpful aspects of some credit card offers. Be sure that you read and understand this perk in order to take advantage of it.

However, even one mistake can cancel your interest-free period. Be sure to make your minimum payments and never pay late.

Not only that, but your interest-free perk might not apply to things like balance transfer — which is one way that some people pay off credit card debt. This is essentially paying off one credit card with another. Keeping track of this period and the stipulations will ensure you take full advantage of it and avoid interest at all.

How to Not Pay Interest on Credit Cards

This strategy is not quite the same as avoiding interest altogether, but is instead a tactic to use if the above strategies to avoid interest fail. If you begin to accrue interest charges and want to avoid paying them, there may be some options for you.

Track Your Purchases and Dispute Fraudulent Charges

Even the most responsible cardholder can get into trouble if credit card fraud leads to unexpected transactions and a higher bill. Be proactive, don’t delay in disputing charges, cancel the account or request a new card if you have to, and understand your rights to withhold payment for disputed charges. If there are fraudulent charges on your credit card, you can’t be held accountable for that interest.

Call Your Credit Card Issuer to Negotiate Interest

If you have a history of using your credit card wisely, you have a good payment history, and you’re consistent as a customer, you may be able to get your interest waived. This might be applicable if you accidentally missed a payment that destroyed your grace period, missed your chance to pay your balance before your interest-free period was over, or you ran into some issues with payment. You shouldn’t (and probably won’t be able to) make a habit out of this, but it’s an option for unique cases.

Churn and Burn Credit Cards

Churning and burning credit cards is the practice of taking out several credit cards with good offers, reaping the benefits, and cancelling them before interest and fees apply. You can also churn and burn by applying for balance-transfer cards to continually transfer your balance to new cards with perks. This isn’t an illegal or wrong way to handle credit card use, per se. However, it is extremely risky and potentially bad for your credit score.

The risk comes with juggling so many cards, and each card’s grace period, interest-free period, and minimum payments. It’s easy to miss a payment and get yourself in trouble with fees. It’s also something that can ding your credit. Things like opening a lot of cards, carrying a high balance, and closing your credit card can all ding your credit. It’s an applicable way of getting out of credit card interest, but it’s also risky.

Credit card use is a bit of a dance, especially for those that are new to credit card use. There are a ton of perks with their responsible use, but there are a ton of negatives with irresponsible use as well. Paying interest is sort of a part of the dance.

Credit card companies stay in business for a reason, and it’s important to remember that when you’re using your card a certain way. In order for you to get more from your card than the company does, you’ll need to use it responsibly. Getting the absolute most out of it involves avoiding the interest and fees altogether. Use your card wisely, educate yourself on the interest-free period, and know there are options to get out of interest if you’re in a tight spot. Just be sure your credit card use is helping you and not hurting you.


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Chelsy is a writer from Montana who now lives in Boise, Idaho. She graduated with her journalism degree from the University of Montana in 2012. She enjoys talk radio, cold coffee, and playing Frisbee with her dog, Titan. Follow Chelsy on Twitter @Chelsy5

This post was updated May 8, 2018. It was originally published April 23, 2018.