Interest-free credit card deals

Interest-free credit card deals seem great - buy something now, pay for it later.

But while that may seem cheap, it won't be if you end up paying interest, or you use the card to buy more than you planned to.

Before you enter into an interest-free deal, consider the steps below.

Steps to take before getting an interest-free credit card


Make sure you can easily afford the monthly repayments

These deals are only a good deal if you can afford to pay the debt off in the interest free period. Check that you can afford the monthly repayments comfortably.

If you don't make the repayments, you'll be hit with high interest charges.

If you know you're going to take longer to pay off the debt, consider using a low-interest credit card or not buying the goods.


Set the credit card limit just above the price of the goods you're buying

A common trap of interest free credit card deals is when you are given a credit card with a higher limit than the value of the goods you're buying. This is to tempt you to use the card for general use.

For example, if you're buying a television for $2500 you may get a credit card limit of $8000. To avoid temptation, request the limit be capped at $3000.


Don't use the credit card for other purchases

Yes, it's tempting - very tempting - to start using the credit card for other purchases, but don't. Concentrate on repaying the interest free deal. If you need another credit card, shop around for the best deal.


If you can't afford the repayments, negotiate a repayment plan

It’s important that you act as soon as you realise you won't be able to pay your credit card debt. Contact the lender with a request for a payment arrangement based on what you can afford.

Refer to Negotiate payment terms for tips on how to do this.

Our tips

  • Make sure you can afford the repayments
  • Keep to the terms carefully and, if possible, pay extra to make sure the debt for the goods is repaid in the interest-free period
  • Keep the limit on the card as low as possible and don't use the card for general purchases
  • Paying off the total debt on an interest-free credit card gives you a great sense of satisfaction as you have avoided paying interest

Interest-free deals explained

Are 'interest free' store deals a good deal?

Some store cards have special deals such as 'buy now and pay nothing for a period of up to 2 to 3 years', which can be very tempting.

These deals are useful if you need to buy something urgently and you're sure you can pay the debt off within the interest-free period. But if you can't, you're likely to be slugged with interest rates of well over 20% on the debt at the end of it.

Similarly, some store cards have 'interest free for 12 months!' offers, but if you miss a single payment during that period, you will start being charged interest.

High rates of interest apply to these accounts and your debt is more than likely to be substantially higher than you expected!

Balance transfers

Another interest-free deal is balance transfers. This is where you transfer the balance of your credit card to a new credit card that has either an interest-free period or a low interest offer for a period of time. The main risk with this type of deal is that after the interest-free or low-interest period ends, the interest rate suddenly jumps to a high interest rate. In addition, if you make any purchases or cash advances on that card during the interest-free period, those purchases will be hit with the high interest rate. If you sign up to these deals, make sure you don't use the credit card and concentrate on repaying the outstanding debt as quickly as possible.

What happens if I don't pay?

If all attempts to negotiate a payment plan don't work out, the lender or debt collector will likely take legal action. If you're in this situation and legal action is under way, contact us on 1800 007 007.