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How to pay off your EOFY sales credit card bill

How to pay off your EOFY sales credit card bill

Every year, the end of financial year sales grow bigger and become more exciting. But come July and August, our new credit card bills can leave a bit of sting in the tail.

So, what can cardholders do to nip an end of financial year (EOFY) sales credit card bill in the bud before it becomes a debt hangover? And are there any alternatives worth considering that can keep our balances in the black?

What to know before you buy

Before you begin a click-frenzy of EOFY sales shopping, it’s worth keeping in mind a few key factors about how you spend, and what you’re spending with.

Interest-free days

Ensure you’re aware of exactly what your number of interest-free days are with your credit card before you checkout with your basket of goodies. Not all credit cards will offer this, but the most common amount is around 44 - 55 days.

This should be on your card statement and may be found online or from speaking to a customer service representative. This way you can keep track of where in your statement period you’ve made the purchase and exactly how many days you have until said purchase begins accruing interest.

Purchase rate

Speaking of accruing interest, knowing your credit card’s purchase rate is fundamental, especially if you can’t pay your balance in full by the end of the statement period

Knowing your purchase rate may help with budgeting for credit card bills, and it may help you to know if you’re paying more than you can afford in interest. The average credit card purchase rate has sat around 16 per cent on the RateCity database for many years now, but there are a number of low-rate credit cards with offers below 10 per cent.

Overseas fees

If you’re shopping in the EOFY sales on an overseas website, there is a chance your credit card provider may hit you with a range of fees, including:

  • Currency conversion fees (USD to AUD for example)
  • Foreign transaction fees (usually around 2-4 per cent of total transaction amount)

All these fees can add up, especially if you’re making multiple sales purchases across several websites. It’s worth looking into what your card issuer charges and keeping this in mind as a figure to add on to your purchase.

Buy now, pay later

If the above is starting to make you nervous, there are alternative payment methods to using your credit card on the EOFY sales. Buy now, pay later platforms (BNPL), such as Afterpay or Zip Pay, allow customers to make payment instalments on full-priced purchases. Generally, this involves something like dividing the cost of one sale into four smaller instalments, to be repaid each fortnight. Arguably the biggest advantage of BNPL over a credit card is that the platform does not charge you interest on your outstanding balance.

It’s become commonplace for online retailers to offer BNPL options at checkout. Just keep in mind that each platform may come with its own set of fees. Also, if you link your credit card to the BNPL platform, then you still run the risk of accruing interest on your purchase. It may be worth considering linking it to your debit card instead.

How to pay off your EOFY sales credit card bill

You know your credit card purchase rate, the overseas fees you may be charged and exactly how many days interest-free you have until you accrue debt. Now, consider the following to help you pay off your credit card bill.

  • Budget carefully - Whether you have 55 days or 15 until your credit card balance starts accruing interest, there is time to adjust your budget to afford repayments on your balance. Consider all the ways you can reduce your expenses, such as pausing subscriptions services, dinners out or gym memberships for a few months. Put all your spare change and savings into repaying your EOFY sales credit card bill so you don’t accrue interest and run the risk of growing debt.
  • Make some extra cash – If you’re unsure you’ll pay off your balance in full, consider making some extra cash by selling your belongings. It’s never been easier to do a spring clean, dust off your old treasures and sell them on platforms like Facebook Marketplace of Gumtree. Even consider helping people run errands for cash through AirTasker or taking up a weekend job, if possible.
  • Balance transfer – Everyone needs a helping hand every now and then and this is where a balance transfer may come in. If you’ve blown your budget with EOFY sales spending and are struggling to get on top of your credit card debt, consider transferring it to a zero per cent balance transfer credit card. The no-interest offer generally goes for several months, if not years, and can offer much needed breathing room to get on top of your debt once and for all. Just be sure to pay off your card balance before the interest-free period ends, or the card will revert to a higher ongoing rate.

Did you find this helpful? Why not share this article?

This article was reviewed by Personal Finance Editor Georgia Brown before it was published as part of RateCity's Fact Check process.

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Learn more about credit cards

How to pay a credit card

There are a few ways to pay a credit card bill. These include:

  • BPAY - allows you to safely make credit card payments online.
  • Direct debits - set up an automatic payment from your bank account to pay your credit card bill each month. You can choose how much you want to pay of your credit card bill when you set up the auto payments.
  • In a branch.
  • Via your credit card provider's app.

How to pay a credit card from another bank

Paying or transferring debt from one lender to the other is called a balance transfer. This involves transferring part or all of the debt from a credit card with one lender to a credit card with another. As part of the process, your new lender will pay out the old lender, so that you now owe the same amount of money but to a new institution.

Many credit card providers offer an interest-free period on balance transfers to help new applicants better handle their debt. During this period, cardholders are not required to pay interest on the debt they brought over from the other card. This can be a great opportunity for consumers to pay off credit card debt with no interest. There are often fees associated with balance transfers; normally, these are a percentage of the amount transferred.

So make sure you read the terms and conditions of the card before transferring any debt across.

How do you pay off credit cards?

The best way to pay off a credit card bill is to set a realistic spending budget and stick to it. Each month, you’ll get a credit card statement detailing how much you owe and how long it will take to pay off the balance by making minimum repayments. If you only make the minimum repayments, it will take you years to pay off your outstanding balance and add extra costs in interest charges. To avoid any extra charges, you should pay the entire bill. 

What is a balance transfer credit card?

A balance transfer credit card lets you transfer your debt balance from one credit card to another. A balance transfer credit card generally has a 0 per cent interest rate for a set period of time. When you roll your debt balance over to a new credit card, you’ll be able to take advantage of the interest-free period to pay your credit card debt off faster without accruing additional interest charges. If your application is approved, the provider will pay out your old credit card and transfer your debt balance over to the new card. 

How is credit card interest charged?

Your credit card will be charged interest when you don’t pay off the balance on your credit card. Your card provider or bank charges you the individual interest rate that is associated with your card, which is usually between 10 and 20 per cent. 

The interest will be added onto your bill each month or billing period if you don’t pay off the balance, unless you are in an interest-free period.

You will be charged interest on anything that hasn’t been paid for inside the interest-free period. Usually you will receive a notice on your bill or statement saying you will be charged interest so you have some form of notice before you’re charged.

How do you use credit cards?

A credit card can be an easy way to make purchases online, in person or over the phone. When used properly, a credit card can even help you manage your cash flow. But before applying for a credit card, it’s good to know how they work. A credit card is essentially a personal line of credit which lets you buy things and pay for them later. As a card holder, you’ll be given a credit limit and (potentially) charged interest on the money the bank lends you. At the end of each billing period, the bank will send you a statement which shows your outstanding balance and the minimum amount you need to pay back. If you don’t pay back the full balance amount, the bank will begin charging you interest.

How does credit card interest work?

Generally, when we talk about credit card interest, we mean the purchase interest rate, which is the interest charged on purchases you make with your credit card.

If you don’t pay your full balance each month (or even if you pay the minimum amount), you are charged interest on all the outstanding transactions and the remaining balance. However, interest is also charged on cash advances, balance transfers, special rate offers and, in some cases, even the fees charged by the company.

The interest rate can vary, depending on the credit card. Some have an interest-free period, otherwise you start paying interest from the day you make a purchase or from the day your monthly statement is issued. So avoid interest by paying the full amount promptly.

How do you use a credit card?

Credit cards are a quick and convenient way to pay for items in store, online or over the phone. You can use a credit card as a cashless way to pay for goods or services, both locally and overseas. You can also use a credit card to make a cash advance, which gives you the flexibility to withdraw cash from your credit card account. Because a credit card uses the bank’s funds instead of your own, you will be charged interest on the money you spend – unless you pay off the entire debt within the interest-free period. If you pay the minimum monthly repayment, you will be charged interest. There are many different credit card options on the market, all offering different interest rates and reward options.

What should I do if my ANZ credit card has expired?

Your ANZ credit card is considered expired only after the last day of the month and year marked on your card. For instance, if your card’s expiry date reads 03/22, it is valid until 31 March 2022 and expires on 1 April 2022. Typically, you should have received a new credit card by that date, and you won’t have to request a new card. 

Once you get the new card, you should remember to switch any automatic payments you have - such as a utility or mobile phone bill - from your expired credit card to your new credit card. Equally, if you are using CardPay Direct to repay your ANZ credit card debt, you may need to update the credit card account details for that service as well. 

In case the new card doesn’t arrive by the expiry date of your current credit card, you can call ANZ on 13 22 73 to find out the reason and if you need to request an expedited card. Please note that if you were planning to close your credit card account or request a credit card upgrade, you may need to call ANZ at least before the 25th of the month your current credit card expires in, as that’s when they may send you the new credit card.

Should I get a credit card?

Once you've compared credit card interest rates and deals and found the right card for you, the actual process of getting a credit card is quite straightforward. You can apply for a credit card online, over the phone or in person at a bank branch. 

How to calculate credit card interest

Credit card interest can quickly turn a manageable balance into unmovable debt. So being able to understand how interest rates translate into dollars is an important skill to acquire.

The common mistake people make is focusing on the credit card’s annual percentage rate (APR), which often sits between 15 and 20 per cent. While the APR does provide a rough idea of how much interest you’ll pay, it’s not entirely accurate.

This is because you actually accrue interest on your balance daily, not annually. So, you need to work out your daily periodic rate (DPR). To do this, divide your card’s APR by the number of days in a year (e.g. 16.9 per cent divided by 365, or 0.05 per cent). You can then apply this figure to the daily balance on your credit card.

Can I transfer money from my American Express credit card to my bank account?

If you’re an American Express credit card customer, you may not be able to transfer money from your credit card to your bank account. However, you may be eligible for cash advances, which involves withdrawing money through an ATM. 

To qualify for a cash advance, you’ll likely have to enrol for American Express Membership Rewards. Consider checking your online credit card account to see if you can withdraw a cash advance and, if so, the fees and charges you’ll incur for this transaction. 

You should remember that cash advances are different from balance transfers, which were available with some American Express credit cards earlier. Balance transfers allow customers to consolidate debt from high-interest credit cards to a credit card offering a lower interest rate. If you only recently applied for an American Express credit card, balance transfers may not be available irrespective of the card you own. 

Can a pensioner get a credit card?

It is possible to get a credit card as a pensioner. There are some factors to keep in mind, including:

  • Annual income. Look for credit cards with minimum annual income requirements you can meet. 
  • Annual fees. If high fees are a concern for you, opt for a card with a low or $0 annual fee. 
  • Interest rate. Make sure you won’t have any nasty surprises on your credit card bill. Compare cards with a low interest rates to minimise risk.

What should you do when you lose your credit card?

Losing your credit card is a serious situation, and could land you in financial trouble. Here is a simple guide detailing what to do when you lose your credit card.

Lock you card – Contact your provider and inform them about your lost credit card. From here lock, block or cancel your card.

Keep track of transactions – Look out for unauthorised credit card transactions. Most banks protect against fraudulent transactions.

Address recurring charges – If your card is linked to recurring charges (gym membership, rent, utilities), contact those businesses.

Check credit rate – To ensure you’re not the victim of identity theft, check your credit rating a month or two after you lose your credit card.