How to Avoid Paying Interest on Your Credit Card

If you’re like most people, you have at least one credit card, and naturally, you don’t want to pay any more in interest than you have to. Luckily, there are a few things you can do to make sure you don’t end up paying a fortune in interest charges every month.

In this blog post, we’ll explain how credit card interest works, how to avoid paying interest altogether, and how to reduce the amount of interest you do pay. So read on for tips and advice that will help keep your credit card costs down!

How Does Credit Card Interest Work?

When using a credit card, the issuer charges you interest on the amount borrowed. This interest is calculated as a portion of the total you owe, and it’s called an annual percentage rate (APR).

Depending on the type of credit card you have, the APR can be either fixed or variable. As the name implies, a fixed APR doesn’t change over time. It may go up if you miss payments, but otherwise, it stays the same. If you own a card with a fixed APR, the issuer must notify you of any rate increases in advance.

On the other hand, a variable APR can change any time as it’s tied to another interest rate, known as an “index rate”. In other words, the interest you pay is linked to the economic gauge lenders use to calculate their rates. Bear in mind that the issuer doesn’t have to notify you before a rate change is implemented. This is because variable interest rates are assumed to fluctuate, and you’ve agreed to these terms in your cardholder agreement.

Notably, if you get a credit card with a promotional APR, the interest rate will change when the introductory period ends. Here again, the credit card issuer isn’t obliged to give you a notice.

The APR on a credit card can also vary depending on how you use it. For example, most credit cards have different APRs for purchases (things like groceries), balance transfers (moving the amount you owe from one card to another), and cash advances (taking money out of an ATM). The interest rate will usually be higher for cash advances than for purchases or balance transfers.

All rates and factors that may affect them are described in your cardholder agreement, so make sure you inspect this before accepting the terms.

When Does Interest Start Accruing?

The credit card company will start charging you interest from the day they send your statement (usually around a month after you make a purchase). This is called a “grace period.” The grace period is how long you have to pay your bill in full before you start getting charged interest.

For example, suppose your credit card statement arrives on January 20th, and the payment due date is February 20th. In that case, you have until February 20th to pay your bill in full without getting charged any interest. If you don’t pay the entire balance by February 20th, you’ll start getting charged interest from January 20th (the day your statement was sent).

How to Avoid Paying Credit Card Interest

Now that we know how credit card interest works let’s talk about how to avoid paying it.

Tip #01: Pay your credit card bill in full every month.

This is the best way to avoid paying interest altogether. If you can’t afford to pay your entire balance, try to pay more than the minimum payment at least. The longer you take to pay off your debt, the more interest you’ll end up owing.

Tip #02: Don’t use your credit card to make cash withdrawals.

Credit cards charge a higher interest rate for cash advances than they do for purchases or balance transfers. So try to get a debit card with overdraft protection instead of using your credit card’s cash advance feature. That way, you won’t have to worry about getting charged a fortune in interest.

Tip #03: Use a credit card with a low APR.

If you know you’re going to be carrying a balance from month to month, try to get a credit card with a low APR. This will help keep the amount of interest you pay each month down.

Tip #04: Try to get a credit card with an introductory APR offer.

This is how many credit cards lure in new customers by offering a low introductory interest rate for the first few months after you open your account. This can be really helpful if you know you’ll be carrying a balance for a while. Just be sure to read the fine print because the regular APR might be a lot higher than the promotional rate.

Tip #05: Use a credit card for emergencies only.

If you can’t pay your credit card bill in full every month, try to use it for emergencies only. This way, you won’t have to worry about accruing a ton of interest.

Wrap Up

Credit card companies make billions of dollars in interest every year. So it’s important to understand how the APR works before you start contributing to issuers’ fortune and racking up debt. By following these tips, you can avoid paying interest altogether or at least keep your finances in check.


How do I avoid paying credit card interest?

You can avoid credit card interest by paying your credit card bill in full every month. If you’re already carrying a balance, try to pay it off as soon as possible so that you aren’t charged any more interest

Can I have more than one credit card?

Yes, you can have multiple credit cards as long as you stay within your credit limit and make all of your payments on time. Having multiple cards can help improve your credit score as long as you use them responsibly.

What is the average interest rate for a credit card?

The average interest rate for a credit card was 16.44% in the fourth quarter of 2021. However, this can vary depending on your credit score and the type of card you have.

If I pay off my credit card balance early, will the interest rate go down?

No, if you pay off your credit card balance early, it won’t affect how much interest you have been charged. What matters is how long it took to repay your debt in total (including any payments made before or after the due date).

How do I transfer my credit card balance?

You can transfer a credit card balance by contacting your new issuer and asking them how to go about doing it. You may need to provide some information such as how much debt you have at present, what type of card it’s on (Mastercard, Visa, etc.), how long ago you opened the account, and what’s your current credit limit. You’ll also have to fill out a form authorizing the balance transfer.

Can I use my credit card to get cash?

Yes, you can use your credit card to get cash, but it’s not advisable because you’ll be charged a higher interest rate than if you used your card for a purchase. Try to avoid using your card for cash advances if you can.

What's the difference between APR on purchases, APR on balance transfers, and APR on cash advances?

Тhe APR for cash advances is typically higher than the APR for regular credit card purchases. Additionally, cash advances may lack a grace period and often include fees such as a processing fee or a foreign transaction fee. Balance transfer cards, on the other hand, often allow you to transfer your existing balance to a new account with an introductory APR as low as 0%.


After I got my degree in translation and interpreting, I started working in a typical office. To get away from my nine-to-five job, I ventured into freelance writing. One thing led to another, and I ended up creating content for SpendMeNot. I have been involved with this site ever since its launch — first as a writer and now as a manager.

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