How to Avoid Paying Interest on a Credit Card

Written By
G. Dautovic
July 07,2023

When it comes to owning and using a credit card, one of the best ways to manage your financial situation is to keep an eye on the amount of interest that you’re paying. Whenever you make a purchase with a credit card, your balance increases, and the amount of interest you pay will also go up.

If you’re not careful about managing your credit card balances, then it’ll quickly lead to higher interest charges each month, especially if you wait too long to pay it back.

But credit card interest isn’t as straightforward as some might think. Learn how to avoid interest on a credit card and what strategies there are to help you minimize the amount you pay.

How Does Interest Actually Work

Interest is essentially a monetary charge that is applied when borrowing money. When it comes to credit card interest, it is a little more complicated than an annual interest that you pay for a loan.

Credit card interest is expressed as an Annual Percentage Rate or APR. While this sounds similar to an annual interest rate, there are a number of different calculations that can obscure how much you’re actually paying in interest. In many cases, credit cards will have a number of different APRs.

This can include APR on purchases, cash advances if you withdraw money, or a balance transfer APR for moving money between accounts. Some lenders also offer an introductory APR rate that is lower than the normal one.

For a more in-depth look into the ins and outs of credit card interest, you can check out our dedicated guide.

Why Should You Avoid Paying Interest?

It’s a good idea to try and avoid paying interest when possible because you’re essentially losing extra money whenever you use your credit card for purchases.

Credit cards allow us to purchase things that are otherwise outside of our financial reach. We achieve this by splitting the payment over several repayments using our credit card.

However, in order for banks to profit from this transaction, they charge interest on those payments, which means everything we buy is technically more expensive than if we bought it with cash.

In addition, some people use their credit cards as a source of money that they withdraw from, much like a regular bank account. However, it’s best to avoid cash advances because there could be additional fees associated with it.

In most cases, a cash advance is around 5% of the amount withdrawn (up to $10) each time you get some cash this way. In short, you should avoid cash advances and watch out for high interest rates on credit cards to save some money. 

Avoiding Credit Card Interest can be Simple

Thankfully, avoiding credit card interest isn’t as difficult as it might seem. Here are some of the strategies you can use:

Learn About Grace Periods

Almost every credit card has a grace period where you can pay the balance in full and not be charged any interest. This is usually around 21 days to a month after a purchase, but some introductory offers might extend beyond this period.

Don’t Delay Your Payments

 If you’re capable of paying off your balances, do it as soon as possible. Many people delay their payments because they feel more comfortable having extra money around for emergencies and unplanned expenses. However, the sooner you pay off those balances, the less interest you’ll be paying.

Stick to a Payment Schedule

It’s also important to make regular repayments, especially if you’re looking to pay off your balances within the grace period. Just consider how much you’re spending with your credit card and then divide that by the grace period.

For example, if you’re making a purchase worth $1,200 and there’s a 21-day grace period, you should be repaying around $400 every week to avoid paying interest later.

Avoid Using Your Credit Card When Possible

As mentioned above, most people use their credit cards for purchases outside of their financial reach. However, if you get into the habit of using your credit card because it’s convenient, it’s easy to overlook the interest you’re paying over a more extended period.

Try to avoid using your credit card for anything but out-of-reach purchases that you’re sure you’ll be able to repay in time.

Apply For a Credit Card With a 0% Intro APR

When you apply for a credit card with a 0% introductory rate, the issuer will give you a certain amount of time during which you won't have to pay any interest on your balance. This can be a great way to save money if you plan to borrow some using your credit card.

Once the introductory period ends, the issuer will start charging interest on your outstanding balance. Therefore, it's essential to pay off your balance in full before this happens. Otherwise, you'll end up paying a lot of money in interest charges.

Stick To a Budget

Create a budget and stick to it. This means being disciplined with your spending and not overspending on things you don’t need. Use your credit card for emergencies only, and make a list of all your expenses so you can track your spending. 

If you use your credit card responsibly and stick to a budget, then you can avoid going into debt and make the most of your credit card. 

In Conclusion

While paying a bit of interest is perfectly fine, you should ultimately aim to try and avoid it on your credit cards whenever possible. There are many reasons to avoid paying interest on your credit card. For one, it can be expensive. Interest rates on credit cards can be high, and if you carry a balance from month to month, you can end up paying a lot of money in interest.

Another reason to avoid interest on your credit card balance is that it can damage your credit score. If you have a high balance relative to your credit limit, it can lower your credit score and make it more difficult to get approved for loans or other credit in the future.


How can I avoid paying interest on my credit card?


You can avoid paying interest on your credit card with these simple strategies:

  • Make use of grace periods where you don’t pay interest.
  • Ensure you’re making regular repayments to cover balances.
  • Try to avoid using your credit card for every purchase.

When should I pay my credit card to avoid interest?


The best time to pay your credit card bill will vary depending on your individual situation. However, the grace period is the first thing to consider because almost all cards offer a grace period of between 21 and 25 days, during which you won't be charged interest on new purchases. After that, you should at least pay off enough to avoid being charged the APR.

Do you pay interest on a credit card if you pay it off every month?


No. If you’re wondering how to avoid interest on a credit card, you should know that you will not be charged interest on your balance when paying your credit card bill in full and on time every month. However, if you carry a balance on your credit card from month to month, you will be charged interest on that balance. The amount of interest you are charged will depend on the interest rate set by your credit card company.

About author

I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.

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