How can I avoid paying interest on my credit card?

In terms of interest rates, some credit cards can be an expensive way to borrow money. The average credit card interest rate is currently around 17-18%, which means that on a deal like this, over the course of a year you`d pay:

• £17-18 for each £100 borrowed
• £85-90 for each £500 borrowed
• £170-180 for each £1,000 borrowed

These are simplified examples that don`t take into account the fact that your balance would be going down as you make each payment (something which means it would be accruing less interest as each month goes past).

If your balance is constantly up and down over the course of a year, the results could be quite different - but this still gives you a rough idea of what credit card debt can cost you.

Interest is charged on your remaining credit card balance at the end of each monthly period. However, there are ways you can avoid paying interest altogether and make your credit card into a useful tool that doesn`t drain your finances.

0% interest credit card deals

There are increasing numbers of low-rate credit cards and cards that offer 0% interest for a limited time. Some cards offer 0% interest on new purchases, while other cards offer 0% on `balance transfers` - debts that have been transferred from other cards - with some cards even offering a combination of the two.

You can use 0% cards (within the agreed terms) for the agreed period without having to worry about paying any interest at all. However, there may be other charges involved - for example, 0% balance transfer deals tend to charge a one-off `balance transfer fee` of around 3%.

Once the interest-free period has finished, you`ll have to either start paying interest on the remaining balance, or find a similar deal on another card (with a similar transfer fee, probably). For this reason, it`s a good idea to use your 0% interest period to focus on repaying your debt as quickly as you can, rather than just paying the minimum each month.

Repaying your balance on time, every time

One advantage of credit cards is that you don`t have to repay everything in one go, but if you do you can avoid paying interest completely. Interest is only charged on what you owe at the end of the month, so by repaying your balance completely you won`t be charged anything.

This is particularly advisable for someone who can`t get a 0% interest deal, as the interest can really begin to add up if the balance remains unpaid for too long.

And don`t forget - if you`re looking to borrow in the long term, a credit card may not be the best way to do it. In this case, a personal loan might well carry a lower interest rate, meaning it would cost you less in the long run.

Compare the best credit card deals with our free credit card comparison table.

Review our latest credit card best-buys

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Product	Transfer rate & period	New Purchases rate & period	Representative APR
Sainsbury's Low Rate Credit Card	- - 0% Fee	- -	6.9% (variable)
	Representative example: With this credit card the representative APR is 6.9% (variable) based on an interest rate of 6.95% (variable), transfer fees of 0% and a credit limit of £1200.
Barclaycard Platinum Simplicity	- - 0% Fee	- -	7.9% (variable)
	Representative example: With this credit card the representative APR is 7.9% (variable) based on an interest rate of 7.9% (variable), transfer fees of 0% and a credit limit of £1200.
Co-operative Bank Clear Credit Card	- - 0% Fee	- -	12.9% (variable)
	Representative example: With this credit card the representative APR is 12.9% (variable) based on an interest rate of 12.9% (variable), transfer fees of 0% and a credit limit of £1200.
Co-operative Bank Platinum Fixed Rate Credit Card	- - 0% Fee	- -	12.9% (variable)
	Representative example: With this credit card the representative APR is 12.9% (variable) based on an interest rate of 12.9% (variable), transfer fees of 0% and a credit limit of £1200.
We provide a representative range of products on competitive terms and do not act exclusively for any credit provider. Credit limits may vary depending on your circumstances.

Tags: credit cards, credit card, interest, avoiding interest, balance transfer, low rate

Fees payable when continuing service is provided. Repaying debt over a longer period may increase the total amount to be repaid. Calls are recorded and are usually free from UK landlines. Mobile phone users may be charged and should check with their service provider. Cards are provided by third parties and are subject to eligibility, status and terms and conditions. Applicants must be UK residents aged 18 or over.