The Ultimate Guide to Credit Cards
Sunday, December 3, 2023

3 Ways to Avoid Interest Charges on Credit Cards (Dec. 2023)

Avoid Purchase Interest Charges On Credit Cards
Adam West

Written by: Adam West

Adam West
Adam West

Adam corresponds with finance experts to publish industry news coverage related to helping consumers achieve greater financial literacy and improved credit. He has more than 12 years of storytelling, editing, and design experience in print and online journalism and is most knowledgeable in the areas of credit scores, financial products and services, and the banking industry.

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Edited by: Lillian Guevara-Castro

Lillian Guevara-Castro
Lillian Guevara-Castro

Lillian Guevara-Castro brings more than 30 years of editing and journalism experience to the CardRates team. She has written and edited for major news organizations, including The Atlanta Journal-Constitution and the New York Times, and she previously served as an adjunct journalism instructor at the University of Florida. Today, Lillian edits all CardRates content for clarity, accuracy, and reader engagement.

See full bio »
Advertiser Disclosure

There’s an old saying, “If you dance to the music, you have to pay the piper.” Many people follow the same mindset with credit cards, thinking that interest charges are simply the fee you pay for the convenience of using plastic.

But, believe it or not, there are multiple ways to avoid purchase interest charges on credit cards. Below we’ll look at three ways to avoid these pesky fees so you no longer have to pay the piper, er, bank.

1. Open a Card with a 0% Promotional APR

Hundreds of credit cards are available to consumers today, and if you’re in the market, you likely have more options than ever before. This competition among issuers for your business means they must sweeten the pot if they’re going to get you to apply.

One way they do this is through signup bonuses and promotional offers. One such offer is an extended interest-free period for new cardholders. Some cards offer six months of purchases with a 0% APR and others will extend the promotional period as long as 18 months.

These cards provide a great way to make a large purchase that you’ll need time to pay off because you’ll only owe what you charge to your card — with no extra fees that make it harder to pay off.

Many rewards credit cards also feature extended promotional APR periods — meaning you can still earn rewards while you avoid accruing interest charges on your balance. Our top cards with a 0% APR introductory period offer the best of both worlds.

0% INTRO APR RATING

★★★★★
4.9

OVERALL RATING

  • Start off strong with 0% Intro APR for 18 months from account opening on purchases and balance transfers. A variable APR of 20.49% - 29.24% on balance transfers and purchases after the introductory period ends.
  • Lower your interest rate by 2% each year. Automatically be considered for an APR reduction when you pay on time, and spend at least $1000 on your card by your next account anniversary.
  • Raise your credit limit. Get an automatic, one-time review for a higher credit limit when you pay on time, and spend $500 in your first six months.
  • All for no annual fee - You won't have to pay an annual fee for all the great features that come with your Slate Edge℠ 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
  • Member FDIC
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR on Purchases 18 months
0% Intro APR on Balance Transfers 18 months
20.49% - 29.24% Variable
$0
Good/Excellent
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0% INTRO APR RATING

★★★★★
4.8

OVERALL RATING

  • $200 online cash rewards bonus after you make at least $1,000 in purchases in the first 90 days of account opening.
  • Earn 3% cash back in the category of your choice - now with expanded categories, automatic 2% at grocery stores and wholesale clubs (up to $2,500 in combined choice category/grocery store/wholesale club quarterly purchases) and unlimited 1% on all other purchases.
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  • No annual fee and no expiration on rewards.
  • 0% Introductory APR for 15 billing cycles for purchases, and for any balance transfers made in the first 60 days. After the intro APR offer ends, 18.24% - 28.24% Variable APR will apply. A 3% fee applies to all balance transfers.
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Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR for 15 billing cycles for purchases
0% Intro APR for 15 billing cycles for any balance transfers made in the first 60 days
18.24% - 28.24% Variable APR on purchases and balance transfers
$0
Excellent/Good

Additional Disclosure: Bank of America is a CardRates advertiser.

Bank of America® Unlimited Cash Rewards credit card Review

at Bank Of America'ssecure website

0% INTRO APR RATING

★★★★★
4.8

OVERALL RATING

  • $200 online cash rewards bonus after you make at least $1,000 in purchases in the first 90 days of account opening.
  • Earn unlimited 1.5% cash back on all purchases.
  • If you're a Preferred Rewards member, you can earn 25%-75% more cash back on every purchase. That means you could earn 1.87%-2.62% cash back on every purchase with Preferred Rewards.
  • No annual fee.
  • No limit to the amount of cash back you can earn and cash rewards don’t expire.
  • 0% Introductory APR for 15 billing cycles for purchases, and for any balance transfers made in the first 60 days. After the intro APR offer ends, 18.24% - 28.24% Variable APR will apply. A 3% fee applies to all balance transfers.
  • Contactless Cards - The security of a chip card, with the convenience of a tap.
  • This online only offer may not be available if you leave this page or if you visit a Bank of America financial center. You can take advantage of this offer when you apply now.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR for 15 billing cycles for purchases
0% Intro APR for 15 billing cycles for any balance transfers made in the first 60 days
18.24% - 28.24% Variable APR on purchases and balance transfers
$0
Excellent/Good

Additional Disclosure: Bank of America is a CardRates advertiser.

Before you go on an interest-free shopping spree, be sure to fully read and understand your credit card’s rules surrounding the introductory period. Some card issuers start charging interest based on your card’s balance on the day your introductory period ends.

Others charge interest on the total amount of money you charged during the period — and continue to charge it until you pay your card’s balance in full. Either option can quickly weigh down your wallet, so be sure you pay your balance in full before your introductory period ends.

Otherwise, you’ll negate the interest-free savings by paying hefty fees further down the road.

2. Transfer Your High-Interest Debt to a 0% Card

If you’re carrying debt on a credit card from month to month, you’ve likely seen those interest charges eat away at your monthly payments — continuing a vicious cycle of never-ending payments that’s hard to break.

But a good balance transfer card can remove the burden of high-interest debt for a period of time. This gives you an opportunity to chip away at your principal and not spin your tires in an interest mud puddle.

Many credit cards today offer introductory offers that provide 0% interest on balance transfers for between six and 18 months. You typically have to initiate the balance transfer within a certain time frame — typically within three months of opening your card — to take advantage of the offer.

These offers can provide a tremendous amount of relief, as your total monthly payment will be dedicated to eliminating your balance, not interest charges. You’ll no longer see those depressing interest fees hit your statement each month, but you may be subject to a balance transfer fee of between 3% and 5% of the transferred balance.

Our top balance transfer credit cards give you extended repayment periods and flexible terms for any balance transfer you initiate.

0% BALANCE TRANSFER RATING

★★★★★
4.8

OVERALL RATING

  • 0% Intro APR for 21 months on balance transfers from date of first transfer and 0% Intro APR for 12 months on purchases from date of account opening. After that the variable APR will be 18.24% - 28.99%, based on your creditworthiness. Balance transfers must be completed within 4 months of account opening.
  • There is a balance transfer fee of either $5 or 5% of the amount of each transfer, whichever is greater
  • Get free access to your FICO® Score online.
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Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% 12 months on Purchases
0% 21 months on Balance Transfers
18.24% - 28.99% (Variable)
$0
Excellent, Good

Additional Disclosure: Citi is a CardRates advertiser.

0% BALANCE TRANSFER RATING

★★★★★
4.8

OVERALL RATING

  • No Late Fees, No Penalty Rate, and No Annual Fee... Ever
  • 0% Intro APR for 21 months on balance transfers from date of first transfer and 0% Intro APR for 12 months on purchases from date of account opening. After that the variable APR will be 19.24% - 29.99%, based on your creditworthiness. Balance transfers must be completed within 4 months of account opening.
  • There is an introductory balance transfer fee of $5 or 3% of the amount of the transfer, whichever is greater for balances transfers completed within 4 months of account opening.
  • Stay protected with Citi® Quick Lock
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR Period 12 months on Purchases
0% Intro APR Period 21 months on Balance Transfers
19.24% - 29.99% (Variable)
$0
Excellent, Good Credit

Additional Disclosure: Citi is a CardRates advertiser.

0% BALANCE TRANSFER RATING

★★★★★
4.8

OVERALL RATING

  • Start off strong with 0% Intro APR for 18 months from account opening on purchases and balance transfers. A variable APR of 20.49% - 29.24% on balance transfers and purchases after the introductory period ends.
  • Lower your interest rate by 2% each year. Automatically be considered for an APR reduction when you pay on time, and spend at least $1000 on your card by your next account anniversary.
  • Raise your credit limit. Get an automatic, one-time review for a higher credit limit when you pay on time, and spend $500 in your first six months.
  • All for no annual fee - You won't have to pay an annual fee for all the great features that come with your Slate Edge℠ 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
  • Member FDIC
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR on Purchases 18 months
0% Intro APR on Balance Transfers 18 months
20.49% - 29.24% Variable
$0
Good/Excellent

While you won’t earn cash back, points, miles, or other rewards on balance transfers, you could reap a far greater benefit — less debt. Just make sure you pay off your transferred balance before the interest-free period ends. Otherwise, you’ll just shift debt from one card to the other.

Another common pitfall that consumers fall into is charging new debt to the card you pay off using the balance transfer. Once you’ve cleared the high-interest card, you should put that card away and use it only in case of emergency, or cancel the card altogether if it makes sense to do so.

3. Pay Your Balance within the Grace Period

Contrary to popular belief, credit card issuers don’t start charging you interest as soon as you use your card to make a purchase. In fact, they’re legally bound to withhold interest charges for several days after you complete your purchase.

Under the Federal Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (or the CARD Act of 2009), you have at least 21 days to pay your bill without incurring finance charges, known as the grace period.

Every credit card issuer must deliver your bill to you — whether by mail or electronically — at least 21 days before your next payment is due. Under your grace period, you have at least 21 days from the time you receive your bill to pay off the new balance.

If you do so, you’ll never pay a finance charge. You can find the details of your credit card grace period in your billing statement.

Image of a Credit Card Statement

Starting on day 22, though, your issuing bank can — and will — start applying interest charges to your balance. That’s why it’s important to never charge a purchase to your credit card you can’t afford to pay off within three weeks. This will save you the money you’d otherwise pay to the issuing bank in interest.

Even if you cannot pay the entire balance within 21 days, you should always try to make some sort of payment within that time frame. Once a purchase enters day 22 on your card, you’ll start accruing finance charges on that current balance. The lower your balance, the lower the interest charges.

Best of all, you’ll continue to earn rewards from your credit card. One reason rewards cards have high APRs is to offset the cost of the rewards the issuing banks dole out every day. So, when you’re not paying interest, you’re not paying for your rewards.

Why Do I Get Charged Interest on My Credit Card?

A credit card is essentially an on-demand loan. An issuing bank determines how much money it will loan you and allows you to continually withdraw from that amount as needed.

The only difference between a personal loan and a credit card is that your card is a revolving credit line — meaning you can reuse your credit after you’ve paid it off.

Banks issue most credit cards and every bank needs to make money to stay in business. The way banks make money is by lending money and charging interest. The finance charges you pay help fund the bank’s operations and gives it more money to lend to other consumers.

Repayment of $5,000 Credit Card Balance w/ 21% APR

According to Discover, the average U.S. household carries approximately $16,061 in credit card debt, and the average credit card interest rate is around 15%. If you only make the minimum payment, you’ll spend 10 years paying that debt down and incur more than $100 in interest charges each month.

That’s exactly what banks want you to do — and precisely why you should budget well enough to pay your entire balance in full each month or add a card to your wallet with an extended introductory 0% APR.

How Do Credit Cards Calculate Interest Charges?

If your credit card sports the average 15% interest, that doesn’t mean you pay 15% in interest each year. That’s because credit card issuers charge interest daily, although your actual interest rate hinges on an annual percentage.

Determining your interest charges is a three-step process that sounds harder than it really is.

1. Find your daily rate: Divide your APR by 365 (days in a year). Some banks divide it by 360 to factor in certain holidays, but each bank is different.

Once you have that, you can…

2. Find your average daily balance: Start by determining how many days are in your billing period. Your credit card statement should prominently display this.

Starting with your carried-over balance from the previous month, find your card’s total balance for each day within your previous billing cycle. Add those balances and divide it by the number of days in your billing period.

That gives you your average daily balance, which then allows you to…

3. Calculate your daily finance charges: Simply multiply your average daily balance by your daily interest rate. You just may be surprised when you find out how much you’re paying every day for your access to credit.

Do You Get Charged Interest if You Make the Minimum Payment?

Yes — your credit card’s issuing bank charges you interest on any unpaid balance you carry on your card each month. As stated above, credit card issuers calculate your interest charges daily, based on your average daily balance. The lower your balance, the lesser your charges.

The only way to avoid these charges is to follow any of the steps listed above — acquire a 0% introductory APR credit card, transfer your balance to a card with an extended 0% APR offer, or pay your existing principal within your allotted grace period.

If you pay less than the minimum, not only will you still incur finance charges, but you’ll also likely see a late fee on your next bill. On top of that, the credit card issuer could report your late payment to the three major credit reporting bureaus.

Even if you’ve made a partial payment, adding a late payment to your credit report can sink your credit score by as many as 110 points in one fell swoop. And recovering from such a damaging blow can literally take years. That’s why it’s advisable to always pay more than the minimum each month when possible.

How Do I Stop Purchase Interest Charges?

The easiest way to avoid interest charges is to not incur the charge at all. That means either paying your credit card balance in full each month, or taking advantage of a 0% introductory APR credit card, like those listed above.

Whether your card features a 0% introductory period on new purchases, balance transfers, or both, you won’t pay finance charges of any kind during your set period — which usually runs between six and 18 months. But once that period ends, your card’s issuer will immediately begin calculating interest charges based on your average daily balance.

Repayment of $5,000 Credit Card Balance w/ 0% APR Offer

Note that canceling a credit card will not stop interest charges from accruing on your account. The only way that can happen is when the balance is paid in full, but you may be able to negotiate a lower APR.

You also have the option of using a prepaid credit card, which will allow you to make purchases on the web and in other scenarios where cash won’t cut it. However, this is not a line of credit – you deposit your own money onto the card to use when needed. You will never be charged interest, though you may be charged a monthly service fee.

Of course, you can also avoid credit card finance charges by paying with cash. That’s not always easy, but it’s a lot cheaper than carrying a large balance on a credit card.

Don’t Waste Your Hard-Earned Money on Interest Fees

At the end of the day, there’s no reason why you shouldn’t use your credit card to pay — as long as you follow one of our ways to avoid purchase interest charges on credit cards.

This way, you won’t find yourself drowning in finance charges each month, and you could put more of your money toward, well, whatever you want, rather than shipping it off to credit card companies that profit at your expense.

Advertiser Disclosure

CardRates.com is a free online resource that offers valuable content and comparison services to users. To keep this resource 100% free, we receive compensation for referrals for many of the offers listed on the site. Along with key review factors, this compensation may impact how and where products appear across CardRates.com (including, for example, the order in which they appear). CardRates.com does not include the entire universe of available offers. Editorial opinions expressed on the site are strictly our own and are not provided, endorsed, or approved by advertisers.