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 repayments, you'll be hit with high interest charges.

If you know you're going to take longer to pay it off, 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 used in interest free credit card deals is to give you 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. Request the limit be capped at $3000, to avoid temptation.


Don't use the credit card for other purchases

Yes, it's tempting - very tempting to start using the credit card for other purchases - 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 an interest free credit card debt completely 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 like 'buy now and pay nothing for a period of up to 2 to 3 years', which can be very tempting.

These are useful if you need to buy something urgently and you're sure you can pay it off within the interest-free period, but if you can't, you're likely to be slugged with rates of well over 20% interest 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 which 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 is suddenly a high interest rate. In addition, if you make any purchases or cash advances you will also be hit with that high interest rate. Make sure you try not to use the credit card and concentrate on repaying the outstanding debt quickly.

What happens if I don't pay?

If all attempts to come to 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 underway, contact us on 1800 007 007.