How to avoid paying credit card interest

Pay off your Closing Balance in full and on time

All new ANZ credit cards come with an interest-free period on eligible purchases. If your card has, for example, up to 55 days or up to 44 days interest-free on the purchases balance, this doesn't mean you have 55 days or 44 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 or 44 days, not 55 days or 44 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')Tooltip 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

Other tools to help minimise your interest