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 where your money is allocated when you make payments towards your credit card.

The different kinds of interest

Interest is 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, it will be displayed on your statement as follows:

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). Interest is charged from the day the cash advance is completed - no interest-free period applies.

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.

How are my payments allocated?

Payments are allocated in the order of interest, fees and then transactions. Payments will be applied to your most recent statement first, and then to any interest, fees and transactions applied since your most recent statement date.

To take advantage of interest-free days on purchases, you will need to pay the total amount owing on your current statement in full (including any cash advance or balance transfer balances) by the payment due date. You'll also need to have paid off your previous month's balance in full by its due date.

Need more help?

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