How credit cards work

Creducation - Interest

Welcome to ANZ Creducation. An online educational series about credit cards. 

Today, we’re dipping into credit card interest.

Understanding personal credit card interest can be like running a bath. It’s important to keep an eye on it and know what to look out for.

To increase your chances of smoother sailing – it’s important to get an understanding of how interest works.

So, if you choose to have a credit card, you might want to make a plan for how you’re going to use it and consider how interest could come into play.

You could choose to make only the Minimum Monthly Payment shown on your statement but you might end up paying more interest this way and it may take longer to pay off or reduce your credit card balance. 

So if your goal is to pay less interest, you could consider paying more than the minimum amount each month.

If an interest free period applies to purchases on your credit card account, you may get up to a certain amount of days interest free, say 44 or 55, as long as you satisfy certain conditions.

But not all purchases will get the full amount of interest free days. And some things won’t get any at all. 

Let’s say this duck is a purchase you made on the first day of your interest free period. 

This purchase could get the maximum amount of interest free days applicable, but let’s consider these two purchases.

So, for example, if they were made later in the statement period, they wont get as many interest free days as a purchase made earlier.

You may also have to satisfy certain conditions like paying your closing balance in full each month to maintain the benefit of an interest-free period. 

So it’s important to familiarise yourself with how they work. 

Keeping this in mind might help you keep your ducks in a row.

So in short, remember… If you choose to have a credit card, think about making a plan for how you want to use it.

Consider paying more than the Minimum Monthly Payment shown on your statement if your goal is to pay less interest.

And be sure to familiarise yourself with how interest-free periods work, if they apply to your account.

So, there you have it. Just a few tips that could help you get your house in order when it comes to personal credit card interest.

Make sure you check out the full series for more Creducation.

Creducation - Payments

Welcome to ANZ Creducation. An online educational series about credit cards. 

Today we’re talking credit card payments, here’s a little information about them.

Paying off your credit card is a bit like following a recipe. Get the times and amounts right and things look good. But get them wrong and it’s… not so good.

Let’s start from the top.

As you spend more, your available credit decreases and the amount you’ll need to repay increases.

If you don’t keep paying your credit card’s closing balance in full and on time each month, you can be charged fees and interest. So the more you spend, the more interest you might pay.

Think of your repayments like a slice of cake – bigger is often better.

So, if you want to pay less interest on your outstanding balance, you might want to consider trying to pay as much of it as you can each month while always being mindful of your other financial commitments.

Pay attention to the minimum repayment warning on your statement. It will give you an estimate of how much interest you might pay over time, if you only make the minimum repayments.

If you’ve got a life full of distractions, it might be useful to set a due date reminder on your phone. 

Or perhaps consider setting up a direct debit to pay off your closing balance in full each month.

So, in short, remember the more you spend, the more interest you might pay.

Think about paying as much as you can.

Take a look at the minimum repayment warning.

And finally, consider setting up a due date reminder or a direct debit to pay off your closing balance in full.

And that’s a little taste of how credit card payments work.

Make sure you check out the full series for more Creducation.

Creducation - Balance Transfers

Welcome to ANZ Creducation. An online educational series about credit cards.

Today, we’re taking a little look at Balance Transfers.

It can be easy to get lost in the weeds when it comes to balance transfers. So let’s dig in…

A balance transfer can be used as a way to consolidate credit card debt by transferring the balance from one credit card to another.

If you do decide to make a balance transfer, you might want to consider closing any other unneeded credit cards ASAP. This way you can resist the temptation to use them.

Here are a few things to look out for with promotional balance transfers.

Some let you pay a lower or zero percent interest rate on the transferred balance.

But this rate usually doesn’t last forever.

After the promotional period is finished, interest is typically charged on what’s left of the transferred balance. This can be at a higher rate.

If you choose to use the card you’ve transferred a balance to, be aware that if you don’t qualify for Interest Free Days on new purchases, those purchases can attract interest at a rate that’s higher than the promotional rate.

A promotional interest rate typically only applies to the transferred balance, not other transactions. Which may attract interest at a higher rate.

Remembering this may help you avoid your balance growing bigger.

So, in short, remember… Consider closing any unneeded credit cards you might be tempted to use.

Be aware that the promotional interest rates usually have a time limit.

If you choose to use the card you’ve transferred a balance to, be aware that if you don’t qualify for Interest Free Days on new purchases, those purchases can attract interest at a rate that’s higher than the promotional rate.

So, there you have it. A few tips that hopefully help you flourish when it comes to promotional balance transfers.

Make sure you check out the full series online for more Creducation.