How is credit card interest calculated?

Working out how interest is calculated on your credit card can be tricky to get your head around, particularly if you’ve never had a credit card before. Read on to find out how it’s calculated, and how you could make the most of interest free days.

Your statement period and due date

We’ll send you a statement every month that you have balance outstanding or there’s activity on your account. It’ll cover your statement period and let you know when your payments are due. If you miss the payment due date, you’ll start accruing interest.
 

The different kinds of interest

Interest is calculated at the end of the statement period. It’s calculated on the average daily unpaid balance from your previous statement, using the annual percentage rates outlined in your Schedule. If you’ve been charged interest, you'll see it on your statement as:

1. Debit Interest Purchase 

This is charged on any purchase made on your credit card.

2. Debit Interest Cash

This is charged when you withdraw money from your credit card (this is called a cash advance). No interest free period applies, and interest is charged from the day the cash advance is completed.

3. Debit Interest Special 

This is charged on balance transfers and any time you have a promotional rate on your account. You may see more than one entry for this if you have multiple promotional rates on your account.

Interest free days on purchases

When you make purchases, interest doesn’t get charged right away. To take advantage of interest free days on purchases (which can be up to 55 days) you’ll need to pay the total amount owing on your current statement, excluding any balance transfer amount(s), by the payment due date.

Interest is charged on all purchases on your outstanding balance from the day after the payment due date. A new interest free period starts as soon as the balance is paid in full.

Interest free days and balance transfers

You can also benefit from interest free days on your purchases when you have a balance transfer. You’ll just need to pay the closing balance owing on your statement, excluding any balance transfer amount, by the payment due date to qualify.

Need more help?

If you still need help you can speak to someone from the team.