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how to use credit card interest-free period wisely: a step-by-step guide

how to use credit card interest-free period wisely: a step-by-step guide

December 30, 2021
10 min read
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do you get stuck in paying interest on credit card transactions? if so, the interest-free period could be your new best friend. as a credit card user, you may know that there is an interest-free period on your card. it might not be offered by all the banks, but most of them provide a grace period of 45-50 days. this grace period can be used wisely to avoid paying interest, and other credit card charges.
the interest-free period is basically a sum of monthly statement cycle of 30 days and the credit card bill payment due date of 20 days. the credit card payment due date is considered 20 days from the last date of the statement. read on to know how you can use the grace period to extract maximum benefits:

plan your transactions

if your credit card billing date is 5th march to 6th April, you should make your credit card payments at the start of the billing date. making a transaction on the 6th of March would give you 50 days of grace period until you have to pay back the whole amount. if you shop in the middle of the month, for instance, on the 20th March, you would only have 35 days until the payment due date. managing your transactions by planning it according to your due date, allows you to enjoy maximum credit card benefits from the grace period.

pay your outstanding balance

to benefit from the interest-free period, you have to pay the entire outstanding amount before or on the payment due date. if any amount from the previous month gets carried forward to the next billing cycle, you will be paying the interest on the remaining amount. 
tip: make your credit card bill payments online. it could happen that you submit a cheque to pay off your outstanding balance, but it doesn’t get credited to the bank for some reason. you would be stuck with paying interest because you chose to pay via cheque. online alternatives such as internet banking, and mobile banking could make the payment process less worrisome.

avoid cash payment

not many credit card users are aware of the fact that the interest-free period is not available on cash payments. banks also charge you for withdrawing cash from your card which is called cash processing fee. this fee will be levied even during the grace period, and that’s why cash payments should be avoided if you want to avoid paying the interest.

manage expenses across credit cards

you can use the benefit of the interest-free period by managing your expenses between two credit cards. if the billing date of your credit cards are aligned, and you are able to enjoy grace period on both cards, then payment of bills become easier.
for example: if your ‘card a’ has a billing date of 15th May, and ‘card b’ has a billing date of 1st May, you should use ‘card a’ for purchases after 15th, and ‘card b’ for purchases before 15th. this way you would be able to avail a longer interest-free period on both credit cards.
interest-free period is a bonus that should be used by credit card users to reap the benefits of zero interest. though paying your outstanding due all at once can be tough, planning it well can save you from paying more than you owe.