Credit Card Arbitrage Calculator 2026: Earn Interest on the Bank's Money
Use your credit card's interest-free period to earn risk-free profit. Park your bill amount in a liquid fund—the bank floats your purchase for free while you collect returns.
100% client-side. No sign-up. No data stored. Instant calculation.
Arbitrage Profit Calculator
Enter your details to calculate free interest earned
The amount you plan to charge on your credit card
Maximum grace period with most premium cards is 45–50 days
Default: 6.8% (Feb 2026 average for top liquid funds). Adjust to current rate.
Critical Risk Warning
Always pay the FULL outstanding amount by the due date. Missing a payment—even by one day—will trigger interest charges of 36–48% p.a. on the entire principal (not just the missed amount). One missed payment can negate months of arbitrage profits. Set an auto-debit mandate for the full outstanding balance, not just the minimum due.
The 45-Day Hack: Strategy Guide
How to earn free interest by parking your bill amount in Liquid Funds
Every credit card in India comes with an interest-free grace period—the window between your purchase date and the final payment due date. Most cards offer 20–55 days. The credit card arbitrage strategy turns this window into a profit engine.
Make the purchase on Day 1 of your billing cycle
This maximises your grace period. If your billing cycle starts on the 1st, a purchase on the 1st gives you ~45–55 days until the due date.
Park the equivalent cash in a Liquid Fund
Instead of spending from your bank account, keep that money in a liquid mutual fund earning 6.5–7.1% p.a. (Feb 2026 rates). These funds have T+1 redemption—money back in your account within one working day.
Collect interest for 45 days
Let the fund accrue interest. On ₹1,00,000 for 45 days at 6.8%, you earn ₹839 in free profit. The bank has funded your purchase at zero cost to you.
Redeem and pay the card IN FULL before due date
Initiate redemption 1–2 days before the due date (T+1 settlement). Pay the full outstanding balance—never just the minimum due. Paying in full is non-negotiable.
Feb 2026 Liquid Fund Rates (India)
As of February 2026, top liquid funds are yielding ~6.5–7.1% p.a. These are overnight/liquid category funds with very low credit risk and T+1 redemption—ideal for short parking windows.
* Returns are indicative annualised yields as of Feb 2026. Past performance is not guaranteed. Always check current NAV and returns before investing.
Maximize Your Arbitrage Window
The strategy only works if you have a card with a long enough grace period. A 50-day card earns you ~11% more profit than a 45-day card on the same spend. See which premium cards offer the longest interest-free periods in India.
See Top 6 Cards for Maximum Grace PeriodHow Credit Card Arbitrage Works in India (2026)
Understand the mechanics, the math, and the edge cases before you start.
Credit card arbitrage exploits a structural feature of revolving credit: the interest-free grace period. When you swipe your card, the bank pays the merchant immediately. You owe the bank nothing until the payment due date—which can be up to 55 days later if you time your purchase for the first day of a new billing cycle. During this window, your cash remains untouched in a liquid mutual fund, accruing daily returns at ~6.5–7.1% p.a. as of February 2026.
The strategy is particularly powerful in India because liquid funds offer T+1 redemption—your money is back in your bank account by the next working day. This means you can keep the money invested until 1–2 days before the due date, maximising the accrual window without any settlement risk. Unlike fixed deposits or debt funds, there is no exit load on liquid funds held beyond 7 days, and no lock-in period.
The formula is simple: Profit = Amount × (Annual Return ÷ 100) × (Days ÷ 365). On a ₹2,00,000 spend with 45 days and a 6.8% fund, you pocket ₹1,677 with zero additional risk—assuming you pay in full on the due date. Repeat this every billing cycle and you're looking at ₹20,000+ per year on disciplined spend, purely from the credit card interest-free period arbitrage.
Pro Tip: The Billing Cycle Hack
To get the maximum grace period (up to 55 days), make large purchases on the first day of your billing cycle. If your cycle starts on the 5th of each month, make your big purchase on the 5th—not the 4th. The difference between the 4th (1 day before reset) and the 5th (day 1 of new cycle) is up to 50 days of extra float. This single habit can add thousands of rupees in annual arbitrage profits at no extra cost.
Risk Warnings: Read Before You Start
This strategy has a near-zero risk floor—but only if executed with iron discipline.
Never miss a payment due date
Indian banks charge 36–48% p.a. interest on the full outstanding if you miss the due date—not just the overdue amount. One missed payment can erase months of arbitrage profit. Set up an auto-debit mandate for the full outstanding balance immediately.
Always pay the FULL amount, never the minimum due
Paying only the minimum due forfeits the grace period on new purchases and invites interest on the remaining balance. The arbitrage strategy is void the moment you carry a balance.
Factor in T+1 settlement for redemptions
Liquid funds have T+1 redemption but that counts only on working days. Initiate your redemption 2 working days before the payment due date to account for weekends and public holidays.
Liquid fund returns are not guaranteed
While liquid funds are among the lowest-risk mutual fund categories, their returns fluctuate with short-term interest rates. The 6.5–7.1% figure is an indicative annualised yield as of Feb 2026 and may change.
Credit Card Arbitrage FAQ 2026
What is credit card arbitrage?▾
Credit card arbitrage is a strategy where you use your card's interest-free grace period to make purchases, then park the equivalent cash in a high-yield liquid fund. The bank funds your purchase interest-free while your money earns returns. On the due date, you redeem and pay in full.
What are the best liquid fund returns in India in February 2026?▾
As of February 2026, top liquid funds yield approximately 6.5–7.1% p.a. ICICI Prudential (~7.0%), Axis Liquid (~6.9%), Mirae Asset Cash Management (~7.1%), and HDFC Liquid (~6.8%) are among the top performers. Always verify current rates before investing.
How long is the credit card interest-free period in India?▾
Most Indian credit cards offer 20–55 days. Premium cards (HDFC Infinia, Axis Magnus, ICICI Sapphiro) typically offer 45–55 days. The maximum window is achieved by purchasing on Day 1 of your billing cycle.
Is credit card arbitrage legal in India?▾
Yes, completely legal. Using your card's standard grace period and keeping equivalent cash in a liquid fund doesn't violate any card terms or regulations. It's a legitimate personal finance optimisation strategy.
What is the biggest risk of credit card arbitrage?▾
Missing the payment due date. A single late payment triggers 36–48% p.a. interest on the full outstanding balance, retroactively from the purchase date. Always set up an auto-debit for the full outstanding amount.
Which credit cards are best for maximizing the grace period?▾
Cards with 48–55 day billing cycles give you the maximum float window. See our curated list of the best credit cards in India for the longest interest-free periods and other arbitrage-friendly features.
Related Tools & Guides
Top 6 picks with the longest interest-free periods, best rewards, and arbitrage-friendly features.
→ Best Fuel Credit Cards 2026Save 4–5% on every fuel purchase. Cashback, surcharge waivers, and bonus reward points compared.
→ Lifestyle Credit CardsAirport lounge access, dining rewards, OTT subscriptions, and travel benefits for urban spenders.
→ Fuel Cost CalculatorCalculate your monthly fuel spend and identify the best credit card to maximise savings.
Ready to Maximize Your Grace Period?
To maximize arbitrage profits, you need a card with a 50-day grace period. See our top 6 picks with the longest interest-free windows, best rewards, and zero annual fees.
See Top 6 Cards for Maximum Arbitrage