Most credit card companies try and hook you by saying that they give you 55 days interest free on your purchases. In fact, most credit card holders don’t get any interest-free period on their credit cards.
This is because if you don’t pay your card in full on due date, interest is charged from the date of purchase.
Furthermore, even if you do pay your card balance in full, you only get 55 days interest free on purchases made on the first day of your billing cycle.
Also read: Can a credit card save you money?
You must settle your card in full
Considering that around 85% of South Africans do not settle their credit card in full, most credit card holders never benefit from the advertised interest-free period.
According to Standard Bank’s analysis, only 20% of credit card holders have benefitted from its 55-day interest-free period at least once in the previous 12 months to December 2023, while only 11% have benefited more than once.
To get the most out of the interest-free period, you need to understand your credit card billing cycle. You only receive the full 55 interest-free days on purchases made on day one of your billing cycle.
Understand your billing cycle
A credit card billing cycle does not usually coincide with a calendar month. The billing cycle could start on any day of the month, and typically runs for 28-31 days, depending on the length of each month.
For example, if you opened your account on 20 June, then your billing cycle will run from 20 June to 19 July, the next one from 20 July to 19 August, and so on. All purchases made between the 20th of one month and the 19th of the next month will fall into one billing cycle.
You will receive your statement on the 19th of each month, and will have around 25 days from that date to settle the bill in full.
If you make a purchase on 20 July – the first day of your billing cycle – you have until 13 September to pay for it, giving you effectively 55 days without any interest being charged. But if you make the purchase on  19 August (the last day of that billing cycle) you will still have to pay for it by 13 September, so you only get 25 days interest free.
Again, this only applies if you pay the balance in full. If you make a partial payment, interest will be charged on the outstanding balance for the previous month.
Listen to Maya and Mapalo Makhu discussing this and other stories on the My Money My Lifestyle podcast.
If you want to make a big purchase and benefit from the full interest-free period, make sure you understand your billing cut-off date. You should make the purchase on the first day of the new cycle.
Also make sure you pay the full balance due on the payment due date – otherwise you pay interest on the outstanding balance right back to the time you made the purchase.
Some transactions immediately incur interest
The following transactions do not qualify for any interest-free period and incur charges from day one:
- Cash withdrawals from your credit card
- Gambling charges
- Transferring amounts from your credit card to another credit card or bank account.
This article was originally published in 2019 and was updated in July 2024.
This article first appeared in City Press.
Hi Maya
Tha thanks for the info. Using your example about the biling period.
If I made a purchase on the 1 March, can I made a partial payment on the 15th March and the balance on the 15th April, and still get the benefit of the 55 day interest free period.
Or does it have to paid in one installment.
Thanks in advance for your response.
you have to fully settle the outstanding balance on the due date as per your statement. If you have made a partial payment before then and make the rest of the payment on due date, then interest will not be charged. But if you have only made the partial payment and not the full payment on due date, then the portion that is not settled will attract interest. What can get complicated is what time period they use to apply that interest, given that there was a partial payment. It would also depend on what purchases took place post partial payment. If you only made one purchase, made a partial payment, then on due date interest would probably apply to the outstanding balance going back to date of purchase. using the Budget option can work if you want to pay it off over a period of time https://mayaonmoney.co.za/2020/01/when-to-use-budget-on-your-credit-card/
Hi there. thanks for the info. I would like to put forward a scenarios. If for example I had a credit card with old debt amounting to R50 000. Now I get a Credit card from another institution and I pay off the R50 000 with this, If I then bounce payments between these two credit cards before the payment due dates would I be charged interest, or because they are being paid off in full I would benefit from 0 interest?
Interest free period only applies to purchases. So if you drew money from your credit card to settle a debt, interest would be charged from day one. They have that loophole covered…
Okay, but what if I tap my first cc on my speed point, washout then pay the other, and repeat the process..I can essentially not be paying interest, correct?
not quite sure what you mean, but if you settle a credit card in full each month you do not pay interest. If you are asking about using one credit card to pay another – that is called credit card kiting. Banks don’t allow it and if they pick it up they will stop it.
Hello Maya, please educate us on differences between Line of Credit and Credit Card, especially if you want to consolidate small debts before tackling big debts.
Can you give me an example of what you would consider a line of credit? This article may help https://mayaonmoney.co.za/2019/09/do-you-know-whether-you-have-a-personal-loan-or-a-credit-facility/
Hi there
If I make a R15000 purchase on the first day of by billing cycle, and over the next 55 days pay off R10000 of that, when the 55 day period is over, will I be charged interest on the outstanding R5000, or the entire R15000?
Seperately, is interest generally charged on a transaction by transaction basis? So each transaction is tracked for the amount of days outstanding, and interest totals are added up and applied to your account monthly? Many thanks