Writer: Adam West
Editor: Lillian Guevara-Castro
Reviewer: Ashley Fricker
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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.
- New! 0% Intro APR for 21 billing cycles for purchases, and for any balance transfers made in the first 60 days. After the Intro APR offer ends, a Variable APR that’s currently 14.99% - 25.99% will apply. A 5% fee applies to all balance transfers. Balance transfers may not be used to pay any account provided by Bank of America.
- No annual fee.
- No penalty APR. Paying late won't automatically raise your interest rate (APR). Other account pricing and terms apply.
- This offer may not be available elsewhere if you leave this page. You can take advantage of this offer when you apply now.
- $200 online cash rewards bonus after you make at least $1,000 in purchases in the first 90 days of account opening.
- Earn 6% cash back for the first year in the category of your choice. You’ll automatically earn 2% cash back at grocery stores and wholesale clubs, and unlimited 1% cash back on all other purchases. After the first year from account opening, you’ll earn 3% cash back on purchases in your choice category.
- Earn 6% and 2% cash back on the first $2,500 in combined purchases each quarter in the choice category, and at grocery stores and wholesale clubs, then earn unlimited 1% thereafter. After the 3% first-year bonus offer ends, you will earn 3% and 2% cash back on these purchases up to the quarterly maximum.
- No annual fee and cash rewards don’t expire as long as your account remains open.
- Select your card design option when you apply – the Customized Cash Rewards design, or the limited-time FIFA World Cup 2026™ design.
- 0% Intro APR for 15 billing cycles for purchases, and for any balance transfers made in the first 60 days. After the Intro APR offer ends, a Variable APR that’s currently 17.49% - 27.49% will apply. A 3% Intro balance transfer fee will apply for the first 60 days your account is open. After the Intro balance transfer fee offer ends, the fee for future balance transfers is 5%. Balance transfers may not be used to pay any account provided by Bank of America.
- This offer may not be available elsewhere if you leave this page. You can take advantage of this offer when you apply now.
Additional Disclosure: Bank of America is a CardRates advertiser.
- Earn 20,000 bonus Points after spending $1,000 in the first 3 months of account opening.
- 0% Intro APR on balance transfers and purchases for 15 months; after that, the variable APR will be 18.49% - 28.49%, based on your creditworthiness. There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).
- Earn 3 ThankYou® Points for each $1 spent in an eligible Self-Select Category of your choice (Fitness Clubs, Select Streaming Services, Live Entertainment, Cosmetic Stores/Barber Shops/Hair Salons, or Pet Supply Stores). Choose your eligible Self-Select Category on Citi Online or by calling customer service. The default Self-Select Category is Select Streaming Services.
- Earn 5 ThankYou® Points for each $1 spent on Hotels, Car Rentals and Attractions booked on Citi Travel® via cititravel.com; earn 3 ThankYou Points for each $1 spent at Supermarkets, on Select Transit purchases, and at Gas & EV Charging Stations.
- Earn 2 ThankYou® Points for each $1 spent at Restaurants; earn 1 ThankYou® Point for each $1 spent on All Other Purchases.
- No Annual Fee
Additional Disclosure: Citi 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.
- New! 0% Intro APR for 21 billing cycles for purchases, and for any balance transfers made in the first 60 days. After the Intro APR offer ends, a Variable APR that’s currently 14.99% - 25.99% will apply. A 5% fee applies to all balance transfers. Balance transfers may not be used to pay any account provided by Bank of America.
- No annual fee.
- No penalty APR. Paying late won't automatically raise your interest rate (APR). Other account pricing and terms apply.
- This offer may not be available elsewhere if you leave this page. You can take advantage of this offer when you apply now.
- 0% Intro APR on balance transfers for 21 months and on purchases for 12 months from date of account opening. After that the variable APR will be 16.49% - 27.24%, based on your creditworthiness. Balance transfers must be completed within 4 months of account opening.
- There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).
- No Annual Fee - our low intro rates and all the benefits don't come with a yearly charge.
- Buy now and pay later. Split your payment for eligible purchases of $75 or more into a fixed payment with Citi® Flex Pay.
- Get free access to your FICO® Score online.
Additional Disclosure: Citi is a CardRates advertiser.
- New! 0% Intro APR for 21 billing cycles for purchases, and for any balance transfers made in the first 60 days. After the Intro APR offer ends, a Variable APR that’s currently 14.99% - 25.99% will apply. A 5% fee applies to all balance transfers. Balance transfers may not be used to pay any account provided by Bank of America.
- No annual fee.
- No penalty APR. Paying late won't automatically raise your interest rate (APR). Other account pricing and terms apply.
- When handled responsibly, a credit card can help you build your credit history, which could be helpful when looking for an apartment, a car loan, and even a job.
- This offer may not be available elsewhere if you leave this page. You can take advantage of this offer when you apply now.
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.
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.
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.
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.
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Editorial Note: Our site content is not provided or commissioned by any credit card issuer(s). Opinions expressed on CardRates.com are the author's alone, not those of any credit card issuer, and have not been reviewed, approved, or otherwise endorsed by credit card issuers. Every reasonable effort has been made to maintain accurate information; however, all credit card offer details, including information about rewards, signup bonuses, introductory offers, and other terms and conditions, is presented without warranty. Clicking on any offer on CardRates.com will direct you to the issuer's website, where you can review the current terms and conditions of the offer.
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