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How Does LendingTree Get Paid?

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How to Avoid Interest on Credit Cards

*Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.

This article was last updated February 28, 2022 . Terms and conditions may have changed. For the most accurate information, please consult the issuer website.

If your credit card offers a grace period, paying the full amount due every month instead of rolling over a balance can allow you to avoid interest charges. While not all credit card issuers offer a grace period, most do.

If you aren’t sure you have a grace period on your account, check your monthly credit card statement for a section on how to avoid paying interest on purchases — if you can’t find that, call the number on the back of your card.

What is a credit card grace period?

A grace period is the amount of time between when the bill is due and the end of the billing cycle.

Typically, a credit card billing cycle is approximately one month long, though that doesn’t mean billing cycle dates will correspond exactly with calendar months. Under the Credit Card Accountability Responsibility and Disclosure Act of 2009 — commonly referred to as the Credit CARD Act — credit card issuers are required by law to give consumers at least 21 days from when a statement is mailed or delivered to them before payment is due.

Most credit cards offer a grace period in that time frame — meaning as long as you pay your card off in full before the due date, you’ll avoid paying interest charges. However, it’s not quite as simple as it sounds, so read on to learn how it works.

How does your grace period let you avoid interest charges?

If you pay your credit card off in full every billing cycle, your grace period will typically let you avoid being charged interest. Note that consistency is key here — because even if you just roll over a balance once in a while, each time you do, you could end up facing interest charges for two months in a row.

Plus, it’s important to know that some types of transactions made with your card don’t qualify for a grace period, such as cash advances or balance transfers — these start accruing interest charges right away.

What happens if you carry a balance past the grace period?

If you don’t pay your credit card off by the due date, not only will you be charged interest on the balance you roll over, but you can be charged interest on new purchases, too. The Consumer Financial Protection Bureau (CFPB) explains that if you pay your balance in full some months and not others, you risk losing your grace period for two months at a time; the month you don’t pay in full and the subsequent month as well.

Why is paying your card in full every month so important?

Carrying a balance occasionally might not seem like a big deal, but interest charges can add up. For example, if you pay off a $1,000 balance over four months on a credit card with a 20% APR, you’ll pay about $25 in interest.

And if you care about credit card rewards, interest charges can wipe out any value you get from a rewards program. Continuing with the example above, if you earned 2% back on the $1,000 spent, that would be $20 in cash back. But after paying $25 in interest, you’re actually facing a net loss of $5 rather than earning anything.

It should also be noted that if you only make the minimum required payment, it’ll take longer to get out of debt, because the minimum payment consists of a portion of your balance plus the interest charges.

In short, it’s best to treat your credit card like cash, and only spend what you can afford to immediately pay off by the statement due date.

Exceptions to the grace period

Typically, your grace period will only apply to purchases. However, some types of transactions don’t qualify for a grace period — plus, carrying a balance from month to month can cause you to lose the grace period on purchases that would normally qualify.

The two primary exceptions where grace periods don’t apply are cash advances and balance transfers. With a cash advance, interest starts accruing from the date you take cash out. We don’t recommend using your card for a cash advance for that reason — plus, your cash advance APR might be higher than your regular purchase APR.

Regarding balance transfers, we should note it’s best to do a balance transfer when you can take advantage of a 0% intro APR offer. However, even if your transferred balance isn’t accruing interest during the intro 0% APR period, you’re still carrying a balance — and that could mean any new purchases made with the card will accrue interest. That’s one reason why you should avoid adding new purchases after transferring a balance and instead focus on paying down transferred debt before the intro period expires.

Avoiding interest with a 0% APR

Another way to avoid being charged credit card interest is by applying for a card offering an introductory 0% intro APR period.

It’s common for intro APR periods to range from 12 to 21 months, and a card might offer an intro APR on purchases, balance transfers or both. During the intro period, you’ll still have to make at least the minimum monthly payment, but interest won’t accrue on any transactions eligible for the 0% APR during the promotional period.

With a card offering a 0% APR intro period, every bit of your payments will go toward the principal of your debt, rather than interest charges plus principal. This makes a 0% APR credit card a powerful tool for paying down debt with a balance transfer or financing a big purchase you can’t cover all at once.

Typically, credit cards with the best 0% APR offers require good-to-exceptional credit to qualify. Here are a few cards to consider:

| Disclosures
Chase Freedom Flex℠
Chase Freedom Flex℠
on Chase's secure site
0% Intro APR on Purchases for 15 months
17.99% - 26.74% Variable
$0
5% cash back on up to $1,500 in combined purchases in bonus
  • Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening.
  • 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories each quarter!
  • 5% cash back on travel purchased through Chase Ultimate Rewards®, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more
  • 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1% cash back on all other purchases.
  • No minimum to redeem for cash back. You can choose to receive a statement credit or direct deposit into most U.S. checking and savings accounts. Cash Back rewards do not expire as long as your account is open!
  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 17.99% - 26.74%.
  • No annual fee – You won’t have to pay an annual fee for all the great features that come with your Freedom Flex℠ card
  • Keep tabs on your credit health - Chase Credit Journey helps you monitor your credit with free access to your latest score, real-time alerts, and more.
680 850

How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appears on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

| Disclosures
U.S. Bank Visa® Platinum Card
U.S. Bank Visa® Platinum Card
on U.S. Bank's secure site
0% intro APR for 18 billing cycles on Purchases
18.24% -28.24% (Variable)
$0
None
  • 0% Intro APR on purchases and balance transfers for 18 billing cycles. After that, a variable APR currently 18.24% - 28.24%.
  • Get up to $600 protection on your cell phone (subject to $25 deductible) against covered damage or theft when you pay your monthly cellular telephone bill with your U.S.Bank Visa® Platinum Credit Card. Certain terms, conditions, and exclusions apply.
  • Choose a payment due date that fits your schedule
  • No Annual Fee
  • Terms and conditions apply.
680 850

How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appears on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

 

Still, take note that it’s possible to lose your 0% intro APR promotion. For example, paying late will cause you to lose your intro APR, and you could even get slapped with a high penalty APR and a late fee, too.

You should also read the fine print to make sure you’re not getting sucked into a deferred interest offer, which are typically found with store cards. While such promotions may advertise that you’ll pay no interest for a certain period of time, there’s a potentially expensive catch — if you have any balance remaining once your promotional period ends, you’ll be charged interest from the date of purchase on the entire purchase amount. In contrast, a card with a 0% intro APR offer will start assessing interest on any balance remaining once the intro period ends, but not on the entire purchase amount from date of purchase.

Frequently asked questions

Most credit cards have a grace period, though it’s not a legal requirement. If you’re unsure, check your credit card statement, or call the number on the back of your card and ask someone on your issuer’s customer service team.

With the CARD Act requiring issuers to provide at least 21 days from statement delivery to due date, grace periods often have a similar length of time. For example, Capital One offers consumers a 25-day grace period, while Discover states that grace periods will be at least 25 days, or at least 23 for billing periods that start in February.

It must be noted that credit card issuers consider a variety of factors in setting your interest rate, and each issuer has its own process for such evaluations. That said, it may be worth joining a credit union if you need a low interest credit card. Unlike credit cards from other issuers, there’s an 18% APR cap on credit cards issued by credit unions.

Glen Luke Flanagan

  • Expertise: Personal finance, credit scoring, credit cards
  • Education: Radford University, East Carolina University

 


 

Glen Luke Flanagan is a senior credit card writer for LendingTree. He joined the team in June 2019, and covers topics including new credit cards, how your credit score works and what you need to know about credit card interest.
 
Before joining LendingTree, Glen worked in journalism and government communications. As a journalist at newspapers in North Carolina and South Carolina, his reporting won awards from the North Carolina Press Association and the South Carolina Press Association, respectively.
 
Glen earned his bachelor’s degree in media studies with a concentration in journalism from Radford University, graduating summa cum laude in May 2014. He also earned a master’s degree in English with a concentration in technical and professional communication, as well as a graduate certificate in marketing, from East Carolina University in May 2022.

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The above offers and/or promotions may have since changed, expired, or is no longer available. Check the Issuers’ website for more details.