• HSBC Low Rate Card
• GEM Visa Card
• Lombard Finance 180 Visa Card (please note, Lombard has been discontinued)

But before we start looking at the ins and outs of interest free finance, let’s take a closer look at what each of these cards has to offer.

HSBC Low Rate Card

Interest Free Options: Up to 55 days interest free on purchases.

Interest Free Finance: Benefit from up to 50 months interest free finance at over 1,000 participating retailers across Australia.

GEM Visa Card

Interest Free Options: Up to 55 days interest free on purchases under $250, and up to six months interest free on purchases over $250.

Interest Free Finance: One, two and three year interest free terms on purchases made at more than 9000 selected stores and healthcare providers in Australia.

Lombard Finance 180 Visa Card (discontinued)

Interest Free Options: Up to 55 days interest free on purchases under $250, and up to six months interest free on purchases over $250.

Interest Free Finance: Up to 48 months interest free when you shop at participating Lombard retailers.

What does it mean for you?

As long as you follow the rules, and you choose the right credit card for the purchases you want to make, interest free finance can be extremely beneficial. Instead of paying a heap of interest on your purchases, you can pay them off over time, without accruing any interest.

This means that even if you don’t have the money to cover the purchase you need right now, you can take advantage of credit, without the disadvantage of paying out in interest.

However, there are certain things to remember when choosing a credit card for its interest free finance offer. Here are some questions to ask yourself, and some tips to make sure you choose the right card – and use it correctly.

If you think this type of card is not for you, but you still want to save money on interest, check out our low interest rate credit cards, and our range of cards with awesome 0% purchase offers.

Where can you use the card?

It’s important to understand where you can use the card for interest free purchases, and that’s easier to do with a GEM Visa card, because of the handy store locator accessible right from the main page of the website.

GEM: According to the Gem Visa website there are 9,000 retailers in Australia which accept the Gem Visa card and offer interest free finance.

Lombard: With Lombard the number of retailers is smaller, but it does include popular retail giants such as IKEA and Super Amart. It should be noted though that you don’t receive any discount for using interest free finance through any particular provider.

HSBC: The website claims that more than 1,000 retailers participate, but you can’t find out who they are until you walk in to a store and ask, or if you happen to know someone who has used the card there. Only selected retailers offer a longer term so it’s a matter of speaking to the retailer about how long you want to pay off the purchase.

How to make sure purchases really are interest free

It’s easy to see the attraction with this credit card type. You’re in the market for a new fridge, new appliance or renovation supplies, and you see an option where you won’t have to pay back any interest for up to two years or more.

That’s a sweet deal by anyone’s standards, so long as you are doing what’s necessary to pay off that balance within the interest free period and not leaving a large chunk unpaid. Here are a couple of helpful hints to ensure your interest free purchase is really interest free.

1) Choose the longest interest free period available

You will still have a large chunk of your purchase left at the end when you just pay off the 2-3% minimum each month required in your statement, so be sure to budget more than that in your monthly repayments even if that means asking for a longer interest free period.

All three of the cards we compared start with 6 months interest free as a standard, but longer interest free periods are available at participating retailers. That means you need to speak to the retailer to find out how long you can have.

Ask for the maximum period available to pay back your purchase; don’t assume you’ve been offered the longest possible time. Any purchase over $250 or in some cases $350 will be negotiable, usually up to 18 months at least, but if you don’t ask you won’t know.

Remember that with every single credit card that comes with interest free finance, it’s that rate that kicks in at the end of that initial period that matters. With HSBC, with Lombard or with anyone else it’s always going to be high.

All three options mentioned already carry an interest rate above 21%, for both purchases and cash advances. You do not want to end up paying that amount of interest for the sake of being able to take your furniture home with you from the store.

2)      Avoid outrageous fees

If you do look at the rates and fees for these cards, you’ll notice that things such as card replacements, late payment fees and statement request fees are much higher than with other standard cards. Unfortunately there’s not a lot of difference between the cards we compared here.

If you lose your Lombard Finance card, for example, you’ll be up for anything between $50 and $200, whereas with other providers you might only be charged $15 (of $50 or so if you lost it overseas). Additional statements can also cost upwards of $8. These things might not matter at the moment you choose the card, but if you do end up making one silly mistake you don’t want to be paying the highest fees.

When it comes to the annual fee, HSBC does have a distinct advantage with a low annual fee and interest rate on purchases. Both Gem and Lombard Visa charge a $99 annual fee.

You can avoid late payment fees, for example, by setting up, a direct debit. Go for an amount that is more than the minimum, preferably more than twice that amount if possible. You should be able to select repayments on the same date each month and you’ll know it’s automatically going towards the debt and paying it off faster for you.

3)      Think about whether you have another option

In-store finance with credit cards can be a great solution if handled correctly, and to do that you must understand how they work. On one hand, if offered one of these cards when you’re already in the store it’s potentially your only option to buy interest free unless, unless perhaps you have another credit card with 0% on purchases for the first six months.

That’s something the salesperson offering you the card is not likely to ask. They will offer you the finance and tell you all about one product, but working out whether it’s your best option is up to you. So the first thing to do is weigh up all of your options for making the purchase, and how long you would really need to pay it back.

Have you had a good or bad experience with an interest free finance card? Got a question we haven’t answered already? Let us know in the comments section below and we’ll do our best to find out what you need to know.