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More than half of American credit card users incur interest because they can’t pay their balances in full each month. For these cardholders, the financial consequences are dramatic.

As unsecured debt, credit cards have a higher interest rate than home mortgages or car loans that are secured by assets. And unlike a home mortgage or a student loan, personal credit card interest payments are never tax deductible.

The simple way to avoid paying credit card interest is to pay your entire statement balance in full and on time each month. But given the current economic climate, that’s often easier said than done. In such instances, consider these seven innovative ways to minimize or avoid paying interest on your cards.

1. Maximize Your Card’s Grace Period

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American credit card users who avoid interest charges may be doing so by paying their balances in full during their credit card’s grace period. This is the time between the end of your card’s billing period and its payment due date. Many credit cards have a grace period of at least 21 days, but it could be longer, such as 25 days.

First, you should learn what date your card’s billing period ends, which is the date that your card’s monthly statement is generated. When you’re able to postpone making a large purchase until your card’s next billing period, after your statement is generated, then it won’t appear on your previous statement. This will give you additional time to pay for the charge in full and avoid incurring interest. If you have multiple credit cards, then you can use the card that has the most recent statement closing date in order to gain the most time to pay off your charges.

But be aware: the no-interest grace period only applies if you paid your previous statement balance in full and on time and did not carry a balance at any time during the previous billing cycle.

2. Use Promotional Financing Offers for New Purchases

There are many credit cards that offer 0% APR promotional financing on new purchases, balance transfers, or both. But because balance transfer offers impose a fee of 3% to 5% of the amount transferred, it makes more sense to use a card with 0% APR financing for purchases first, rather than transfer a balance to a card later.

Recommended Low-Interest Credit Cards

Credit Card Intro APR APR Learn More

Wells Fargo Active Cash® Card

0% intro APR for 15 months More Info

0% intro APR for 15 months from account opening on purchases and qualifying balance transfers. 20.24%, 25.24%, or 29.99% Variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.

20.24%, 25.24%, or 29.99% (Variable)

Chase Freedom Unlimited®

0% Intro APR for 15 months More Info

This card allows new cardholders to save money with an introductory 0% interest rate on new purchases and balance transfers for the first 15 months of account opening. After the introductory period, a 20.49% - 29.24% variable rate will apply. Balance transfers made within the first 60 days of account membership will be charged a balance transfer fee of either $5 or 3% of the amount of each transfer. After 60 days, that balance transfer fees increases to either $5 or 5% of the amount of each transfer, whichever is greater

20.49% - 29.24% (Variable)

Wells Fargo Reflect® Card

0% intro APR for 21 months More Info

0% intro APR for 21 months from account opening on purchases and qualifying balance transfers. 18.24%, 24.74%, or 29.99% variable APR thereafter; balance transfers made within 120 days qualify for the intro rate, BT fee of 5%, min $5.

18.24%, 24.74%, 29.99% (Variable)
Citi Double Cash

Citi Double Cash® Card

0% for 18 months on Balance Transfers More Info

New cardholders enjoy 0% introductory APR on all balance transfers for the first 18 months of account opening. After that, the variable APR will be 19.24% - 29.24%, based on your creditworthiness. Balance transfers do not earn cash-back rewards and are charged an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first four months of account opening. After that, the fee will be 5% of each transfer (minimum $5).

19.24% - 29.24% (Variable)

3. Create a Plan to Pay off Your Interest-Free Balances

Offers for interest-free promotional financing are great, but they don’t last forever. To escape the cycle of debt, divide the amount of your debt by the remaining months in the offer and then commit to paying that much each month. To make this work, you also need to stop using these cards for new purchases.

Use another card that you pay off each month. Or better yet, stop using credit cards for new purchases and use cash or debit cards for your daily purchases. This will help you to control your spending and won’t allow you to incur more debt.

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4. Pay Early but Spend Late

If you’ve tried everything, and you’re still unable to avoid interest charges by paying your statement balances in full, then you should try to minimize your costs. Since credit card interest is assessed based on your account’s average daily balance, you can take steps to reduce that balance.

It starts by delaying as many purchases as possible, especially the largest ones. The next step is to make your payments as early as possible, rather than wait for the due date. In fact, it will help you to make multiple payments each month, rather than save up to make a single payment later.

5. Avoid Rewards Credit Cards

Earning cash back and travel rewards can be great, but only if you’re able to avoid interest by paying your statement balances in full and on time. If you can’t, then you should be using a card with the lowest possible standard interest rate. That’s because simple, non-rewards cards will have lower interest rates than similar cards that offer rewards.

6. Consider Cards from Federal Credit Unions

PenFed cards


The Federal Credit Union Act allows the National Credit Union Administration (NCUA) to set a maximum interest rate that its members can charge. Currently, the rate is capped at 18% until September 10, 2024. That is below the most competitive interest rates offered by many major credit card issuers.

7. Transfer Your Balance to a Low-Interest Loan

Since credit cards have very high interest rates, you can save money by transferring or consolidating your balances to a lower interest rate loan. Options can include a home equity line of credit or a personal loan.

So long as the interest rate is significantly lower than your credit card’s and the fees aren’t high (or there are none), then you can save money on interest while you pay down your debt.

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Bottom Line

It’s no fun to realize how much interest charges cost you when you carry a balance on your credit cards. But by using these seven proven ways to reduce or eliminate your interest charges, you can save more money than you might have thought.


Jason Steele

Jason Steele is a journalist who specializes in covering credit cards, award travel and other areas of personal finance. As one of the nation’s leading experts in the credit card industry, Jason’s work has been featured at mainstream outlets such as Yahoo! Finance, MSN Money and Business Insider.