Interest Free Credit Cards

Our guide outlines interest free credit card options, the hidden costs of such cards, common scenarios where people stay in debt, alternatives and frequently asked questions.

Updated 20 May 2025

Summary of Interest Free Credit Cards

There are two types of 'interest-free' credit cards, and they behave very differently. If used incorrectly, they are arguably debt traps that hold you back financially for years to come.
The first type of interest free credit card is a long-term finance card such as GEM Visa and Q Mastercard. These are credit cards which charge which offer "0% interest for six months" (or something similar) on specific purchases. The idea is that you make repayments while the interest is 0%.
The second type is a balance transfer credit card, where you can get a 0% p.a. interest rate on transferred money for a limited number of months. The idea is you repay the debt while the interest rate is 0%. You can't apply for a balance transfer credit card if you are a customer of the bank offering a deal. For example, if you have a BNZ credit card, you will need to apply with other banks such as ANZ, ASB or Westpac.

This guide explains the options available should you want to apply for a zero interest credit card or consider a balance transfer if you have existing debt. We list and compare the various offers currently available and the fees and limitations. We cover:

Understand The Hidden Costs of Interest-Free Credit Cards

While 'interest-free' credit cards sound appealing, they can quickly become debt traps if not managed correctly. If you don't pay down the balance regularly, you'll be left paying a lot of interest. Long-term finance cards like GEM Visa and Q Mastercard, and balance transfer credit cards, can trap you in debt if you don't make timely repayments.

We believe that a zero percent credit card is an illusion for most people. We see them as a marketing ploy more than a debt solution. Long-term finance cards allow you to make significant purchases with the promise of no interest for the first six months or so. The catch, however, is that if you fail to repay the entire balance within this period, you'll be hit with a staggering interest rate of 25% p.a. (or even more in the case of the GEM Visa). The result is high monthly interest charges and your debt inflating.

Similarly, balance transfer credit cards offer a 0% p.a. interest rate on transferred balances for a limited time, providing temporary relief from high-interest debt. But once the interest-free period ends, any remaining balance is subject to high interest rates, often exceeding 20% p.a. Without a commitment to ongoing repayments to clear the balance, you can get stuck in expensive debt that is hard to escape.

The debt trap from large credit card balances are holding hundreds of thousands of New Zealanders back

The real danger lies in accumulating large balances without the means to repay them within the interest-free period. Many people fall into the trap of making only the minimum payments, thinking they have plenty of time before interest kicks in.
However, after the 0% peroid ends comes interest rates hovering around 30% p.a., and the financial burden is created. GEM Visa's list of retailers shows how many everyday companies offer interest free purchases for anyone with the GEM Visa card.
Our view is simple: These cards are trouble. Failing to pay off your debt in time means you'll be stuck repaying the principal and the inflated interest charges. GEM Visa states that "29.49% p.a (is the) prevailing interest rate applies after the interest free term ends". If you've amassed a $5,000 GEM Visa credit card debt, you'll be paying around $120 a month on interest until it's repaid once the interest free period ends.
'Interest-free' credit cards can act as debt traps, enticing you with an initial period of no interest but ultimately forcing you into high rates if you cannot repay the balance in time. The 0% interest rate financial freedom they advertise can quickly become financial misery, leaving you with large balances and no easy way out of a huge debt.
Balance transfer credit cards often get ignored, and the balance isn't repaid. When the 0% offer is over, the debt costs jump up to 20%+ p.a. and finding spare money to pay down the balance may be difficult.
It's arguable that avoiding balance transfer altogether and making a determined effort to repay the balance on the original card in a specific number of months is a better financial decision. You may pay more interest, but you commit to clearing the debt and changing your behaviour, rather than just shuffling it to another card and dealing with repayments 'later'.
For these reasons, we suggest you carefully consider whether to apply for or use one of these cards - they are dangerous debt makers for many people.
In the video below, MoneyHub Founder Christopher Walsh explains must-know facts about Balance Transfer Credit Cards:

Interest Free Credit Cards Options - Undestanding Long-Term Finance Cards

Interest Free Credit Cards Options - Understanding Long-Term Finance Cards

Zero interest credit cards, such as GEM Visa and Q Mastercard, offer an initial period during which no interest is charged on purchases. When you use a zero interest credit card, you can make purchases and avoid paying interest on those purchases for a specified period, usually six months, and in some cases, much longer (depending on the retailer).

However, it's important to note that once this promotional period ends, the interest rate jumps significantly - the rates hover on around 30% p.a. This can result in substantial interest charges if the balance isn't fully paid off within the interest-free period.

If you are determined to apply for such a card and take advantage of the zero interest repayments, we suggest considering the following features:

Long interest-free period: Choose a card with retailers that offer the longest possible interest-free period to give yourself more time to pay off the balance without incurring interest.
Reasonable Fees: GEM Visa and Q Mastercard charge an annual fee, which can't be avoided.
Repayment strategy: Develop a clear plan to pay off the balance before the interest-free period ends. Many New Zealanders with the GEM Visa and Q Mastercard find it hard to do this, given the lack of focus on repayments (beyond the minimum amount, which will never clear what's owed).

To keep your debt under control, we suggest the following approach:

Make regular payments from day one: Ensure you make payments significantly more than the minimum required. For example, if you owe $3,000 (due in six months), you'll need to pay $500 every month to reach $3,000 and avoid being charged interest.
Resist using the card: Many of Q Mastercard's retailers promote 18 - 50 months interest free. This sounds generous, but it can easily create a debt bomb where purchases get charged and ends with thousands of dollars owed.

Overall, zero interest credit cards are useful if you know you'll have the money to repay the balance the day before interest is charged. However, most people don't have this luxury. Therefore they require disciplined repayment strategies to avoid falling into the trap of high-interest rates once the promotional period ends, and drag the debt for years to come.

The current options are GEM Visa and Q Mastercard:

1. GEM Visa - 29.49% p.a. prevailing interest rate applies after the interest free term ends

The Deal:

Interest Rate: 0% p.a. for 6 months on all purchases $250 and over and 0% p.a. on long term deals (at selected retailers).
Annual Fee: $65 (charged $32.50 half-yearly) and a one-off $55 establishment fee.
Monthly Payments: Per GEM's terms and conditions, this must be above the monthly minimum (either 3% or $20 of the balance owing - whichever is greater)

What You Need to Know:

You can't transfer a balance from another GEM Visa card.
The minimum credit limit is $1,000. The minimum balance transfer amount is $100, and the balance transfer amount can't exceed 80% of your credit limit.
After the 0% period ends, a 29.49% interest rate applies to any remaining transferred debt until it’s paid off.
For more details or to apply, visit the GEM Visa website.

2. Q Mastercard - 28.95% p.a. prevailing interest rate applies after the interest free term ends

The Deal

Interest Rate: 0% p.a. for long-term finance transactions at selected retailers. Standard interest rate of 28.95% p.a. applies to any outstanding balance at the end of the interest-free period.
Annual Fee: $50
Establishment Fee: $55 applies to your first Long Term Finance (LTF) transaction. A $35 Advance Fee applies to subsequent LTF transactions.
Monthly Payments: Per Q Mastercard's terms and conditions, this must be above the monthly minimum (either 3% or $10 of the balance owing - whichever is greater).

What You Need to Know:

Lending criteria, fees, and terms and conditions apply.
Minimum purchase and/or minimum payment amounts may be required, see offers for details.
After the 0% period ends, a 28.95% interest rate applies to any remaining balance until it’s paid off.
The rate and fees are correct as of the date of publication and are subject to change.
For more details or to apply, visit the Q Mastercard website.

The Best Zero Interest Balance Transfer Credit Cards NZ

Interest Free Credit Cards Options - Understanding Balance Transfer Credit Cards

A balance transfer happens when you receive a new credit card which takes the balance from an existing card. In the process, you owe the new credit card the money, and the existing card is repaid.
The new credit card will have a low interest rate, often 0%. Most cards will have an annual fee.
With a balance transfer credit card, your interest rate is low, or 0% for a set period. This lets you pay the debt off faster as you’re not paying interest on top. Balance transfer credit cards are a fast way to clear debts.

What cards are eligible for a balance transfer?
You can apply for a balance transfer with any Visa, MasterCard, American Express, Farmers Card, GEM Visa, Q Card, Q Mastercard, and/or most other store cards. Some banks may limit what other cards they will transfer - it is essential to check with the bank offering the balance transfer credit card BEFORE submitting an application.

Picking the Best Balance Transfer Credit Card

The trick is to pick a card with a small transfer fee and a long low-interest rate period so that you maximise the savings available.
We recommend going for the longest low-interest rate period (i.e. 12 months vs 6) even if the transfer fee and/or annual fee is higher. Credit card interest is a killer, so locking in the balance interest-free for longer is going to save a lot.
Most importantly, as the old card is now free of debt, we recommend lowering the credit limit so you can still use it but only for emergencies. It’s pointless to clear the balance only to build up new credit card debt afterwards.
Our video below outlines the fine print and common terminology used in balance transfer credit card offers:

Best Balance Transfer offering a Low Ongoing Interest Rate - 0% for 6 months - The Co-operative Bank Fair Rate Credit Card

Our view: The Co-operative Bank's credit card charges an annual fee of $20 and offers an attractive long-term low interest rate.

The deal:

Interest rate: 0% for 6 months, then 12.95% afterwards
Annual fee: $20
Balance transfer fee: None
Monthly payments: Must be above the monthly minimum (either 3% or $10 of the balance owing - whichever is greater)

What you need to know:

You can't transfer a balance from another Co-operative Bank card.
The minimum credit limit is $1,000. The minimum balance transfer amount is $100, and the balance transfer amount can't be above 80% of your credit limit.
After the 0% ends, it's 12.95% interest on any remaining transferred debt until it’s paid off.
Don't spend/withdraw cash on this card, the interest rate for new purchases is 12.95%
You can only transfer from another card once, but you can consolidate multiple cards in one balance transfer.
For more details or to apply, visit the Co-opperative bank.

0% for 6 months - ASB Visa Light

Our view: The ASB offers an attractive balance transfer for short-term debt with no fee, but you'll need to pay the balance off within 6 months to avoid the 13.50% interest rate being charged on the remaining balance.

The deal:

Interest rate: 0% for 6 months, then 13.50% p.a. afterwards
Annual fee: $0
Balance transfer fee: none
Monthly payments: Must be above the monthly minimum (either 2% or $5 of the balance owing - whichever is greater)

What you need to know:

You need to transfer a balance in the first 30 days to get the 0% interest period.
You can't transfer a balance from another ASB card.
After the 0% ends, it's 13.50% interest on any remaining transferred debt until it’s paid off.
Don't spend/withdraw cash on this card, the interest rate for new purchases is 13.50%
For more details or to apply, vist ASB.

Worth Considering - Best Low Rate for 12+ months - ANZ Low Rate Visa - 1.99% for 24 months

Our view: The ANZ offers an attractive balance transfer for short-term debt with no annual fee in the first year. You'll need to pay the balance off within 24 months to avoid the 13.90% interest rate being charged on the remaining balance.

The deal:

Interest rate: 1.99% for 24 months, then 13.90%* afterwards
Annual fee: No charge
Balance transfer fee: 1.99% p.a
Monthly payments: Must be above the monthly minimum (either 3% or $10 of the balance owing - whichever is greater)

What you need to know:

You need to transfer a balance in the first 30 days to get the 0% interest period.
You can't transfer a balance from another ANZ card.
After the 0% ends, it's 13.90% interest on any remaining transferred debt until it’s paid off.
Don't spend/withdraw cash on this card, the interest rate for new purchases is 13.90%
For more details or to apply, visit BNZ.

MoneyHub Founder Christopher Walsh shares his views on Balance Transfer Credit Cards:

"You need a strategy to work a balance transfer card to your advantage if you decide to apply for one. My view is simple - a six month deal at 0% is, for most people, better than a 12-month or 24-month deal at 2% or 5%. Why? Because having six months helps to circuit-break your spending behaviour and encourages you to get the debt paid off month after month. The risk with a 1-2 year balance transfer offer is you ignore it, don't make any repayments, and end up with a debt bomb.

I get emails from everyday New Zealanders who can't seem to pay off their credit card debts. These tend to be average income earners who have around $5,000 to $10,000 on store cards, Q Card/GEM Visa and/or credit cards. The reality is that with the cost of living, repaying debt isn't easy when you're paying high-interest rates on the money you owe. The problem is, the debt isn't going away - I believe a balance transfer credit card, when used correctly, will help clear the debt(s) you've built up.

My view is simple: Whatever you do, please clear the balance you transfer. That is the entire point of the card. Balance transfer credit cards are a temporary safety net from aggressively high credit card interest rates - this guide is designed to help you repay what you owe and move on. Please follow it carefully to get rid of arguably the most useless debt you'll ever have".

MoneyHub Founder
Christopher Walsh

Common Scenarios that Arise Using Interest-Free Credit Cards

We outline typical scenarios to illustrate the risks of applying for any interest-free credit card. If you're uncertain about what to do, we suggest holding back from applying for a credit card - the risks and long-term debt creation can be significant. We explain what can happen below:

1. Balance Transfer Traps:

John's Story:

John has $10,000 in credit card debt on a card with a 20% interest rate. He transfers this balance to a new card offering 0% interest for six months.
John makes only minimum payments, thinking he has plenty of time. After six months, he still owes $8,000. The new card's interest rate jumps to 25%, adding $167 in monthly interest charges.
John now struggles to make payments, and his debt continues to grow.

Sophia's Dilemma:

Sophia owes $5,000 on her credit card, with an interest rate of 18.99% p.a. She transfers the balance to a new card offering 0% interest for nine months. Confident she can pay it off in time, Sophia continues to use her old card for daily expenses. Nine months later, she still owes $4,000 on the balance transfer card. The interest rate jumps to 22.95% p.a, and she now pays $77 monthly in interest. Simultaneously, her old card balance has grown to $3,000. Sophia's total debt has increased, and she's paying high interest on both cards.

Mark's Misery:

Mark has $7,500 in credit card debt and transfers it to a new card with 0% interest for 12 months. Initially relieved, Mark only makes minimum payments and occasionally misses them.
By the end of the promotional period, he still owes $6,000. The interest rate reverts to 23.95% p.a, resulting in $120 monthly interest charges.
Mark's debt feels unmanageable, and he's stuck in a cycle of high-interest payments and growing debt.

2. Zero Interest Trap:

Lisa's Downfall:

Lisa gets a zero interest credit card with a 12-month promotional period. Excited, she spends $15,000 on various purchases over the year, making only the minimum payments.
The interest rate rises to 29.49% at the end of the year, and she now faces monthly interest charges of approximately $370.
Lisa cannot make significant payments beyond the interest, and her debt spirals out of control.

Alex's Debt Mountain:

Alex signs up for a zero interest credit card, thrilled by the prospect of no interest for 12 months on some big ticket purchases.
He spends $10,000 on a holiday to Fiji and new electronics. Throughout the year, he makes the minimum payments, accumulating $1,000 in additional purchases.
When the promotional period ends, he owes $9,000, and the interest rate jumps to 28.99%. Alex now pays around $218 monthly in interest, struggling to make a dent in the principal balance.

Rachel's Reality Check:

Rachel uses a zero interest credit card to finance a $20,000 home renovation, confident she can pay it off in 18 months. She makes small monthly payments, prioritising other expenses.
After 18 months, she still owes $16,000. The interest rate skyrockets to 29.49%, resulting in nearly $394 in monthly interest charges.
Rachel's debt feels insurmountable, and she regrets not planning her repayments bett

Alternatives to Interest-Free Credit Cards

We don't like the risks that come with 'interest free' credit cards. At best, they help with debt repayment, but for many, they generate a lot more long-term credit card debt, which is hard to pay off. We publish a list below, arguably easier said than done, but designed to help you help you avoid more debt.

1. Start Repaying Existing Debts

Focus on paying down your current debts instead of acquiring new ones.
Use a budget app and allocate extra funds towards high-interest debts first.
This method, often called the "debt avalanche" approach, helps reduce the amount of interest paid over time.

2. Seek Financial Counselling

Professional financial counselling from organisations like DebtFix and CAP can provide you with personalised advice and strategies for managing and reducing your debt. They can help you create a plan for your financial situation and goals.

3. Avoid New Debt By Spending Less

Resist the temptation to incur new debt and focus on living within your means and saving for future expenses.
Building an emergency fund can also help you avoid relying on credit cards for unexpected costs.

Frequently Asked Questions

What happens if I miss a payment during the interest-free period on a GEM Visa or Q Mastercard?

Missing a payment during the interest-free period can result in losing the promotional interest rate, meaning the remaining balance may start accruing interest at the standard high rate immediately. Late fees and penalties may also be applied, increasing your debt.

Can I transfer a balance from a GEM Visa or Q Mastercard to a bank-issued balance transfer credit card?

Yes, but not all balances may be eligible, and some issuers may have restrictions.

What are the typical fees associated with zero interest credit cards?

Common fees include an annual fee and an establishment fee for the initial setup. Interest is charged on top of these fees if you fall behind and don't repay the debt within the interest-free period.

How does making only the minimum payment affect my balance?

Making only the minimum payment can significantly prolong the time it takes to pay off your balance and pay much more in interest once the promotional period ends. It may also lead to high debt levels that are difficult to manage.

What should I do if I know I won't be able to pay off the balance before the interest-free period ends?

If you think you'll struggle to pay off the balance before the interest-free period ends, consider transferring the remaining balance to another card with a lower interest rate. We suggest talking to a budget advisor for debt management help.

When I make a payment on a GEM Visa, Q Mastercard or other interest free credit card, how does the money get allocated to the balance owed?

Certain cards use an "order of priority" system when you pay. It varies by card, but here's how payments can typically be allocated:

Overdue Amounts: Payments first cover any overdue amounts, such as arrears or missed payments, since these balances usually incur the highest interest rates.
Fees and Miscellaneous Charges: Next, payments go towards any balances due on fees and miscellaneous charges. This includes account fees, ensuring these are paid off promptly.
Repayment Plans: Payments are then applied to balances on repayment plans, prioritising those with the highest interest rates first. If multiple purchases have the same interest rate, payments are allocated to those nearing the end of their interest-free period.

Overall, the payment system typically meets the minimum payment for each interest-incurring purchase. This is achieved by splitting your payment across all plans that require a payment for that month, making repayments as efficient as possible.

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