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How to avoid paying credit card interest
Let’s face it, paying credit card interest bites big time. Especially when it can be avoided. Below we’ll look at how to minimise your credit card interest – and how to avoid paying it altogether.
Pay off your Closing Balance in full and on time
All new ANZ credit cards come with an interest-free period on eligible purchases of up to 55 days. This doesn't mean you have 55 days interest-free after every single new purchase. Rather, the interest-free period runs from the beginning of the statement cycle until the payment Due Date.
So, the number of interest-free days you get on a new purchase will depend on how many days there are left on your statement cycle before your next payment Due Date. Remember, it’s "up to" 55 days, not 55 days for every purchase. Plus, not all transactions, such as cash advances, get the benefit of interest-free days.
To take advantage of the interest-free period, you must pay off your Closing Balance (or if applicable, your 'Adjusted Closing Balance') in full by the Due Date on your statement each month.
Remember, if you don’t pay the full Closing Balance (or if applicable, the 'Adjusted Closing Balance') by the Due Date, the interest will generally be charged on the purchases balance from the day after the Due Date shown on your statement.
By sticking to this one golden rule – that is, paying off your credit card in full by the Due Date each month – you'll avoiding paying interest on your credit card purchases balance, while making positive moves towards your financial wellbeing.
Failing that, pay off as much as you can each month
Okay, so you've had some big expenses this month and you can't pay off your Closing Balance (or if applicable, your 'Adjusted Closing Balance') in full by the Due Date on your statement.
If you find yourself in this situation, your credit card statement will include a line showing the minimum amount you need to pay to meet the terms of your contract, known as the Minimum Monthly Payment.
While paying this amount is acceptable (plus any 'Payable Immediately' amount), it’s certainly in your best interest to pay more than the minimum amount to reduce your overall debt and the amount of interest you’ll be charged on the balance due.
Also, if you haven’t paid the Closing Balance (or if applicable, the ‘Adjusted Closing Balance’) in full by the Due Date, interest will generally be charged on the balance due from the day after the applicable Due Date shown on your statement.
At the very minimum, pay your Minimum Monthly Payment
Let’s assume it’s been a horrid month budget-wise, and there’s no way you can pay off your Closing Balance (or if applicable, your ‘Adjusted Closing Balance’) by the Due Date on your statement.
You have the option to pay the Minimum Monthly Payment (plus any 'Payable Immediately' amount such as overlimit or overdue amounts). If this is paid, you can avoid being charged a late payment fee.disclaimerHowever, you’ll still be charged interest on your purchases balance because you won’t have cleared your Closing Balance by the Due Date.
Remember, if you pay more than the Minimum Monthly Payment (plus any 'Payable Immediately' amount), you'll end up paying off your credit card debt faster than if you only pay the minimum amount.
Check the Minimum Payment Warning on your statement to see an estimate of how much interest you could pay – and how long it could take to pay off the Closing Balance – if you only make the minimum monthly repayments.disclaimer
Transactions not covered by the interest-free period
The interest-free period on all new ANZ credit cards only relates to the purchases balance.
Be mindful that certain transactions, like the examples listed below, will incur interest as they are considered a Cash Advance:
- Using your credit card to make cash withdrawals
- Using your credit card to make gambling transactions
- Purchasing traveller’s cheques with your credit card
- Using your credit card to buy or load value onto a prepaid or store card
ANZ Instalment Plans
ANZ Instalment Plans can be a handy way to repay your credit card purchases over 3, 6 or 12 months.
Approval, eligibility criteria and T&Cs apply. Fees and charges may apply.
Balance transfers
If you’ve got a non-ANZ credit card or store card debt that’s impacting your financial wellbeing, you may be eligible for a balance transfer.
Tips to help you pay on time
- Setup payment alerts
Your credit card Due Date will generally fall on the same day each month or thereabouts. So, pick a date about a week earlier and setup a payment alert on your phone, or in your calendar.
- Set up direct debits
Some credit card providers give you the option of setting up a direct debit that automatically pays off a certain amount on your credit card each month. We offer a service called CardPay Direct where you can elect to pay the Closing Balance in full, a fixed amount, or the Minimum Monthly Payment (plus any ‘Payable Immediately’ amount) each month.
Visit CardPay Direct or manage your card to find out more.
The last word on avoiding credit card interest on your purchases
Aim to pay the Closing Balance
Your goal should be to always pay the Closing Balance (or if applicable, the Adjusted Closing Balance) in full by the Due Date on your statement. This will help you to avoid paying interest on your credit card purchases.
Failing that, pay as much as you can
If you can’t pay the Closing Balance (or if applicable, the Adjusted Closing Balance) by the Due Date on your statement, you should aim to pay as much as you can to minimise the amount of interest you’ll be charged.
Never miss the Minimum Monthly Payment
If all else fails, make sure you pay the Minimum Monthly Payment (plus any ‘Payable Immediately’ amount) by the Due Date on your statement. Otherwise, you may be charged a late payment fee along with any interest on the purchases balance.
Buy now, repay later with ANZ Instalment Plans
ANZ Instalment Plans could be a handy way to repay your credit card purchases. Enjoy 0% p.a. interestdisclaimeron Instalment Plans for purchasesdisclaimerover 3, 6 or 12 months.disclaimer
Approval, eligibility criteria and T&Cs apply. Setup Fee applies.
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The truth about the credit card minimum repayment
While you can choose to simply make the minimum repayment on your personal credit card each month, doing so can come at a cost. If you only pay the minimum, you’ll end up paying more interest and it may take longer to pay off or reduce your credit card balance.
Note other fees may apply to overdue or overlimit amounts.
ReturnThe information provided in the Minimum Repayment Warning is provided as a guide only. It provides an estimate of how long it will take an account holder to pay off a credit card Closing Balance for a particular month if the account holder only pays the Minimum Monthly Payment each month. It shows how much interest the account holder could end up paying assuming the account holder makes no new transactions and fees and interest rates do not change.
ReturnA Plan interest rate is a discounted purchase interest rate that applies to an ANZ Instalment Plan balance if and while it’s enrolled in a Plan. For more information, see the ANZ Instalment Plan T&Cs (PDF).
ReturnApproval, eligibility criteria, T&Cs and Setup Fee applies.
ReturnT&Cs and eligibility criteria apply. Fees and charges may apply.
Return