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Published December 9, 2022

What Are Zero-Interest and Interest-Free Credit Cards?

Many credit cards have interest-free introductory offers, but only a handful offer lifetime no interest.

Interest-free credit cards charge 0% interest for purchases, balance transfers or both. Many lenders offer 0% promotional interest rate on traditional credit cards, but these are only interest free for a limited period.

Credit cards offering lifetime zero interest are similar to their traditional cousins, but are also considered an alternative to buy now, pay later (BNPL) plans

Interest-free credit cards vs interest-free days

Many traditional credit cards charge interest but provide an interest-free period, usually 44 or 55 days, as a perk. If you pay the statement balance on time, you won’t pay interest on the purchases made during the statement period. 

Types of interest-free credit cards

Credit cards can be interest free for a limited period or a lifetime.

Cards with interest-free introductory offers

There are two main types of sign-up promotions: 

  • 0% balance transfer offers. These allow you to move an existing credit card balance to a new card, with 0% interest charged on the amount transferred for a period of up to 36 months. You’ll still pay interest on purchases and cash advances. When the promotional period ends, the unpaid amount on the balance transfer accrues interest at the revert rate, which is often the card’s purchase or cash advance rate. 
  • 0% purchase rate offers. These allow you to make card purchases without being charged interest for up to 24 months, but balance transfers and cash advances will still attract interest. When the introductory period ends, unpaid purchases will accrue interest at the card’s standard purchase rate.

Lifetime zero-interest credit cards

These have an ongoing 0% purchase rate, so you’re never charged interest for purchases. 

How do lifetime zero-interest credit cards work?

While you’re not charged interest on unpaid balances, a flat monthly fee is payable. Lenders sometimes waive this fee if you don’t use your card or if you repay the previous month’s statement balance on time. Like traditional credit cards, you’ll still make minimum repayments.

Common features of lifetime zero-interest credit cards

No interest monthly fee credit cards are typically ‘no-frills’. They don’t have rewards programs or complimentary insurances, but you can still expect basics like fraud protection features, tap and go convenience and digital wallet payments.

Credit limits are usually low — up to $3,000 — with no balance transfers or cash advances permitted.

Many have no late payment fees and no international transaction fees. 

Zero-interest credit card vs buy now, pay later

Zero-interest credit cards and BNPL plans both offer a spending limit and allow you to pay for goods and take them home immediately. They charge monthly fees instead of interest. 

However, BNPL arrangements tend to have more fees, for things like late payments, monthly account keeping, credit establishment and payment processing. While credit cards are widely accepted, you can only use BNPL at participating retailers. 

That said, BNPL purchases are split into fixed repayments, which could make budgeting easier. Repayments are automatically deducted from your bank account, so you’ll need to have sufficient funds to avoid overdraft charges.

Zero-interest credit cards vs interest-free intro offers 

Credit cards with introductory offers will only stay interest free for a limited period. 

Low credit limits mean zero-interest cards are more suitable for everyday spending, but a traditional credit card is better for big ticket items, balance transfers and cash advances. 

Whereas zero-interest credit cards charge a monthly usage fee, traditional credit cards require an annual fee for account maintenance, rewards programs and card benefits.

How to get a zero-interest credit card

To be eligible, you’ll typically need to be: 

  • an Australian citizen or permanent resident 
  • aged 18 or over 
  • receiving income from the same source for at least three months
  • up-to-date with rent and bills

You’ll also need an Australian home address and a local bank account.

Notable zero-interest credit cards 

The following cards offer lifetime no interest:

NAB StraightUp

Offers tiered credit limits up to $3,000 and a monthly fee of $10, $15 or $20, depending on your limit. There are no late fees or international transaction fees. The monthly fee is waived if you don’t use the card and have no outstanding balance throughout the statement period.

CommBank Neo

Offers tiered credit limits up to $3,000 with a monthly fee of $12, $18 or $22 based on your limit, which is waived if you don’t use your card and repay your statement balance on time. There are no fees for late payments, foreign exchange transactions or additional cardholders.

Westpac Flex

The Flex card has a credit limit of $1,000, no late fees and a $10 monthly fee. The fee is waived if you repay your previous month’s statement balance on time. 

Community First n0w

Provides tiered credit limits up to $3,000 with a monthly fee of $9, $14 or $19, depending on your limit. The monthly fee is waived if you don’t use your card and have a $0 balance for the calendar month. Cash advances are allowed with no interest but a $3 fee applies. International conversion fee is 3%. There are no late fees.

Pros and cons of a zero-interest credit card

Lifetime zero-interest credit cards allow you to stay in control of your debt and pay off purchases at your own pace without accruing interest. 

Depending on how often you use your card and whether you carry a balance, you may not incur any fees. Compared with BNPL, zero-interest credit cards have wider acceptance and fewer charges.

However, there are potential drawbacks. Their credit limits may be insufficient for big-ticket items and there’s no flexibility to withdraw cash or make balance transfers.

Monthly fees add up if you use the card frequently — they could add up to as much as $264 a year.

Alternatives to a zero-interest credit card

Below are other low-cost credit card options:

Low rate credit card

Low rate credit cards have a purchase rate below 15%. These cards tend to have competitive annual fees, which might work out cheaper than the monthly fees you accumulate on a zero-interest card if you carry a balance. They allow balance transfers and often have higher spending limits.

No-annual-fee credit card

No-annual-fee credit cards have high interest rates but could be an option if you plan to repay your monthly balance. While they won’t offer rewards and perks, you can transfer balances, withdraw cash and potentially get a bigger credit limit.

About the Author

Kristie Kwok

Kristie Kwok is a personal finance expert at NerdWallet. She has covered personal and business finance for almost 10 years. She is a qualified chartered accountant and has previous work experience in consumer banking, investment banking and taxation. She also has a Bachelor of Commerce degree, specialising in accounting and finance. Kristie became a writer to combine her passion for words with her in-depth industry knowledge. She is based in Melbourne, Australia.

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