If you’re like most people, you probably have a credit card or two that you use for everyday purchases. But did you know that if you don’t pay off your balance in full each month, you could be paying interest on your purchases?
In this blog post, we’ll show you how to avoid paying credit card interest, so you can keep more of your hard-earned money in your pocket.
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Know when your credit card billing cycle starts and ends
Your credit card bill provides a grace period, which is the period of time during which you can pay your balance without incurring interest. The length of the grace period varies by issuer, but it’s usually 21 to 25 days.
To avoid paying interest on your purchases, you need to know when your billing cycle starts and ends, and make sure you pay off your balance before the end of the grace period. Once you know your billing cycle dates, mark them on a calendar or set a reminder on your phone so you don’t forget.
Understand how credit card companies calculate interest
To avoid paying interest on your credit card balance, you need to understand how credit card companies calculate interest. Interest is calculated based on your average daily balance, which is your balance at the end of each day divided by the number of days in the billing cycle. Your interest rate is the percentage of your average daily balance that you’ll be charged each day.
To avoid paying interest, you need to pay your balance in full by the due date each month. If you can’t do that, try to keep your balance below 30% of your credit limit. That way, you’ll be charged less in interest and you’ll also have a lower risk of defaulting on your debt.
Pay your balance in full and on time every month
Paying your balance in full and on time every month is the best way to avoid interest charges. Your credit card issuer will typically send you a statement at the end of each billing period, and you’ll have a set grace period to pay off the balance before interest is charged. For example, if your grace period is 21 days and you pay your balance in full on day 20, you won’t be charged any interest. But if you don’t pay off your balance in full until day 22, you’ll be charged interest from day 21 forward.
Paying just the minimum due won’t help avoid interest charges either. That’s because the minimum payment is usually just enough to cover fees and interest charges, not your actual balance. So even if you make your minimum payment on time every month, you’ll still end up paying plenty of interest charges over time.
To avoid paying interest charges, always try to pay off your credit card balance in full and on time each month. If that’s not possible, at least try to pay more than the minimum due so you can start chipping away at your balance. And remember, the sooner you pay off your balance, the less interest you’ll have to pay overall.
Use a credit card with a low interest rate
If you carry a balance on your credit card, you want to Avoid Credit Card Interest Charges. One way to do this is to use a credit card with a low interest rate. Many credit cards offer introductory rates of 0% for 12 months or more. If you can find one of these cards and transfer your balance to it, you can save a lot of money in interest charges. Just make sure that you pay off the balance before the intro rate expires, or you will be stuck paying interest at the regular rate, which is often quite high.
Avoid cash advances and balance transfers
Cash advances and balance transfers often come with higher interest rates than purchases, so it’s best to avoid them if possible. If you must take out a cash advance, try to pay it off as soon as possible to avoid accruing too much interest. The same goes for balance transfers – try to pay off theTransferring your balance to a lower-interest credit card can save you money, but only if you pay off the transferred balance before the introductory period ends. If you’re not able to do this, you’ll end up paying more in interest than you would have with your original card.