Whether you're making everyday purchases or using your card for larger expenses, understanding how credit card interest works can help you manage your money more effectively and avoid unnecessary costs. From using grace periods effectively to exploring low introductory APR offers, here are some ways to avoid interest on your credit card.
What is credit card interest and how does it work?
Credit card interest is essentially the price you pay for borrowing money with your credit card. The interest rate is usually listed as a yearly rate called the annual percentage rate or APR.
Different types of transactions can come with different APRs. For example, your purchase APR will likely be different from your cash advance APR. You might have a low intro APR on balance transfers for a period of time but pay a different interest rate on purchases. Different types of transactions also come with different rules as to when interest is charged. For example, interest typically starts accruing on cash advances immediately. It’s important to check your cardholder agreement for specifics.
Ways to avoid credit card interest or pay less in interest
Utilize your interest-free grace period
Many credit cards have a grace period. Grace periods are the time between the end of a billing cycle and the payment due date. During the grace period, you won’t be charged interest on new purchases if you didn’t carry a balance from your last billing cycle.
Pay off your balance entirely within the grace period, and you can avoid paying any interest on purchases. However, this only works if you pay off your statement balance in full each month by its due date.
Check the terms of your credit card agreement to find out what the grace period is and under what circumstances it applies.
Not every type of transaction gets a grace period. Balance transfers, for example, will typically not qualify for a grace period. Neither will cash advances.
Consider a low introductory APR credit card offer on purchases
One way to pay less interest is to take advantage of a low introductory APR offer on purchases. Cards with a low intro APR on purchases offer a low rate for a set period. Once the period ends, you’ll start accruing interest at the credit card’s regular purchase APR on any purchase balance that remains and any new purchases.
Consider consolidating debt with a low introductory APR balance transfer offer
A balance transfer lets you move a balance from one credit card to another.
Taking advantage of a low intro APR on balance transfers can give you a chance to pay off existing debt while accruing less interest. Once the introductory period ends, you’ll start accruing interest at the credit card’s regular APR for balance transfers on any remaining amount of the balance you transferred.
There may be a balance transfer fee for each balance you transfer (typically a percentage of the balance transferred or a dollar amount, whichever is higher). So, review the terms of the offer carefully..
Cards Offered by Citi
Citi offers several low intro APR cards, such as the Citi® Diamond Preferred® Card, the Citi Custom Cash® Card, and the Citi Simplicity® Credit Card. These credit cards can provide financial flexibility and come with other features and benefits for you to enjoy.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
