Do you want to avoid paying interest on credit cards? What is the best strategy to avoid paying interest on your credit cards? There are many credit card companies that offer no-interest credit cards. This is a great way to pay off your credit card without having to worry about paying any interest. What’s more, these credit cards don’t have annual fees or hidden costs! In this article, we will talk about the different strategies you can use and what credit cards are best for avoiding paying interest on credit cards.
What Is Interest On Credit Cards?
Credit card companies charge an expense called “interest” when you carry a balance over time that isn’t paid off each month. Interest can be charged through several ways, including late fees or other charges incurred during your billing cycle (like purchases). You do not want credit card debt because it’ll take years for most people in this economy before they’re able to pay their credit card bill from just one paycheck.
Interest is the fee credit card companies charge to use their credit cards. You are charged interest when you carry a balance on your credit card over time and don’t make payments each month. Your credit card company will calculate how much money they need you to pay in order for them not to owe any more credit, which is called the principal amount that needs to be paid off from your account every month. This calculation includes adding up all the fees and interest rates applied by banks of different credit cards as well as other charges incurred during that particular billing cycle (such as late fees).
Related: How To Pay Down Your Credit Cards
What Is The Best Strategy To Avoid Paying Interest On Your Credit Cards?
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products however our opinions are our own.
1. Pay In Full
Paying your credit card off in full every month is the best way to avoid paying interest, but not everyone can do that. If you only make the minimum payments on your credit card then it will take much longer to pay off your debt and you’ll end up paying a lot more for your purchase than just what’s stated on the credit card statement.
So if you know that there are some purchases that won’t be paid back before their due date or if you don’t have enough money saved up yet to properly afford them, try saving up and diverting those funds towards making larger monthly credit card payments instead of spending them elsewhere. This will ensure these purchases will get paid back faster without costing as much in finance charges down the line.
The first tip would be to always make payments with your credit limit at least 50% of the way down. For example, if you have credit card debt of $1000, try to pay off at least half the balance each month so your credit limit will be closer to $500. This way you’ll have credit available for emergencies or other unforeseen expenses that may come up in a given year.
If you can’t pay off your credit cards in full and don’t want to pay high interest rates you can apply for a consolidated loan with Payoff. With Payoff you can get a loan to pay off multiple credit cards all with one simple payment and a low ARP of 5.99% up to 24.99%. The average credit card has a APR of 16.99% to 25.99%.
2. Cash Back Credit Cards
Another strategy is using cash-back cards when making purchases on credit. Some credit cards offer users rewards points back after they make their purchase and if those points are large enough then it’s another way to offset interest penalties with some quick calculations:
If my credit card offers one point per dollar spent, I would need 100,000 reward points before any money was credited back onto my account because there are usually no minimums for how many reward points you can earn through this type of credit card. The credit card I’m currently using offers a minimum of $0.20 per reward point, so at the moment it would take me 20 years to accumulate 100,000 points because there’s no way for me to earn more than one credit point every two dollars spent.
Having a cash back or rewards credit card is a great way to offset any interest you might be paying from that credit card.
Related: The 10 Best Rewards Credit Cards
3. No-Interest Credit Cards
Another strategy is to apply for a credit card that offers no interest. Some credit card companies will offer you no interest for up to a year or more. This means you won’t have to pay any interest for a year giving you more time to pay off your debt. Some credit cards companies offer no interest for 12 months and up to 18 months. For example, the Chase Freedom Unlimited Credit Card offers you no-interest for 15 months.
Related: 8 Best No-Interest Credit Cards
4. Transfer Your Debt
Another way to avoid paying interest is to make sure there is a balance transfer perk when applying for new credit cards. Balance transfers mean that if you do carry over some debt from one credit card account, the accumulative amount of deferred payments or purchases made with another credit account can be transferred as well and incur no additional finance charges while doing so.
If you do have a lot of debt on a credit card and can’t pay it off before the interest is applied you can open a new credit card that has no interest on balance transfers so you can move your debt from one credit card to the next without having to pay any interest.
An example of a good credit card to transfer your balance to is the Discover It Cash Back Credit Card. This credit card is interest free for balance transfers and purchases for 14 months.
Do I Need Good Credit To Have A No-Interest Credit Card?
Yes, credit cards with no interest are generally geared towards people who have a good credit score. Low APR credit card can also be an option for those struggling to pay their credit card bill off in one month without owing any interest on it.
For some credit cards, like the Discover It Cash Back Card , applicants will need a higher credit limit and better than average credit scores in order to qualify .
However, most of these low-interest rates come at the cost of less rewarding rewards programs or cash back incentives that other premium cards offer . For instance, if you’re someone who plans on traveling abroad regularly then often times there is an annual fee associated with keeping your account open as well as not having access to the best perks offered by other credit cards .
Therefore, credit card applicants should compare their options and make a decision that is best for them. For instance if you plan on carrying balances from month to month then it may be worth trying to get approved for the credit card with no interest or one of those low APR credit cards which will keep your balance below the limit.
If you’re someone who pays off their credit card bill in full every time, then applying with more rewards programs might work better for you as long as they can still manage an annual fee.
Something else people need to watch out for are deferred-interest credit offers because these often come at high rates up front so borrowers have been known not only to rack up debt but also pay much higher rates.
When Should I Pay My Credit Card To Avoid Paying Interest?
To avoid paying interest you should pay attention to the credit card billing statement. If the credit card company lists the interest rate charged for that billing cycle you should pay off your credit card in full at least 30 days before this date.
If no interest is listed on your credit card statement then you will not have to worry about paying it since there are many credit cards without any interest at all.
What credit card should I get to avoid paying interest?
The credit cards that have no interest with the longest promotional periods are usually best for paying off debt. If you can make your payments on time this credit card will be ideal to help you pay down your credit card without any additional cost. These credit cards come with annual fees but they may also waive the balance transfer fee or offer other incentives if they see that you’re a low-risk customer who is likely going to use them in a responsible manner.
A travel rewards credit card would also be good alternative since there’s no need to worry about potential late charges and it often has excellent benefits like free hotel stays, flight discounts, and more perks just by using their credit card .
These credit cards are usually best for people who travel frequently and have a higher credit score. They offer excellent rewards programs, which can help you get the most out of your credit card spending without paying any interest at all.
In conclusion, to avoid paying interest on credit cards you should find out the credit card you have and what they offer for paying interest. Try to pay off your credit card balance every month. If you do have a balance try to find a credit card that offers no interest. If you still have a balance after your no interest period ends apply for another credit card and transfer your balance.
Do you have bad credit, no credit, or want to learn how to become a credit expert?
Signup for the #1 DIY Credit Repair Course
The Credit Repair Course includes:
- How to find your credit report and your ACTUAL Credit Score
- A breakdown of how your credit score is calculated
- How to increase your credit score in each category
- The best tools to increase your credit score fast
- How to dispute negative items from your credit report
- Credit dispute letter templates and when to send them
- The best credit cards for your credit score
- How to use credit cards to leverage your money and business
- How to use credit cards to get free travel, bonuses and rewards
Learn how to fix your credit for life by enrolling in The Credit Repair Blueprint today!