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Is it possible to make a part payment on my outstanding credit card balance?

Making a part payment is one way you can reduce your credit card balance more effectively than paying the minimum repayment.

When you're presented with your credit card bill you have three choices: pay the minimum repayment amount, pay the full amount or pay an amount somewhere in between. There is technically a fourth choice of not paying it and incurring a late fee, but we don't recommend it.

The third choice is a part payment, and simply refers to you making a more substantial payment than the minimum repayment. A part payment will reduce what you owe, but won’t clear your debt completely.

Some people are under the impression that making part payments stops you being charged interest. Unfortunately that’s not the case. Let’s have a look at how part payments actually work.

How do part payments work?

When you make a part payment you reduce the total amount you owe your card provider. This allows you to keep using your card, and stops you running into any late fees. Because interest is charged on your outstanding balance, by reducing your balance you’ll reduce the amount of interest you’re charged.

Part payments don’t stop you accruing interest. The only way to completely avoid interest is to repay your entire balance every month. Anything left unpaid will be charged interest. You’ll also lose the benefit of your interest free days for the next billing period.

While part payments won’t help you during this billing period, they will help you during the next. This is because interest is charged daily, so by making part payments throughout the month you’ll reduce your balance and interest charges for the next billing period.

Let's look at an example.

Rob has a balance of $10,000, with a credit card that charges a rate of 19% p.a. If he paid the minimum repayment of 2% he'd make payments of roughly $200 each month and pay off approximately $500 off his balance in addition to $1,800 worth of interest over one year. If Rob kept this up it would take him longer than 25 years and more than $27,000 in interest.

If he instead made a part payment of $600 a month, he'd pay total interest of $1,803 over the 1 year and 8 months it would now take him to pay off his balance.

As you can see making a part payment can be a great solution to large credit card debt.

How can you use part payments on multiple credit card debts?

Having multiple credit card debts can make it difficult to pay your whole balance off. Here are some strategies which use part payments to reduce multiple credit card debts.

  • Pay the highest interest rate balance first. This strategy sees you order your debts from lowest interest rate to highest interest rate and pay the minimum repayment on all of them except for the highest interest rate debt. Make part payments on this debt and reduce it and then work your way down the list.
  • Pay the lowest interest rate balance. Another strategy concerning part payments is the snowball method. This sees you order your debts from smallest to largest. You pay the minimum repayment on all debts except for the smallest, which you make part payments on. Once this debt is paid off you move to the next debt, and pay the amount you were paying on your first debt in addition to the minimum repayment. This sees you gradually build up your part payments to bigger the debt is.
  • Pay highest balance first. You could employ a strategy similar to the snowball method except with the highest balance first.

Balance transfer offers

If you're in debt, one way to use part payments to their full effect is to take advantage of a balance transfer offer.

These allow you to transfer your debt to a new credit card and get a lower interest rate—sometimes even 0% for a number of months. This means your payments will go towards the principal debt rather than interest charges, and can give you a headstart.

Comparison of balance transfer credit cards

Rates last updated July 23rd, 2018
$
% p.a.

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Name Product Balance transfer rate (p.a.) Purchase rate (p.a.) Annual fee Amount Saved Product Description
Westpac Low Rate Card
0% p.a. for 24 months with 1% balance transfer fee
13.49% p.a.
$0 p.a. annual fee for the first year ($59 p.a. thereafter)
Offers a 0% for 24 month balance transfer option, first year annual fee waiver and a competitive purchase rate.
Citi Clear Platinum - Exclusive Offer
0% p.a. for 24 months with 1.5% balance transfer fee
14.99% p.a.
$49 p.a. annual fee for the first year ($99 p.a. thereafter)
finder Exclusive: Receive 0% p.a. for 24 months on balance transfers and a discounted annual fee in the first year. Plus, access to Citi World Privileges.
Suncorp Clear Options Platinum Credit Card - Exclusive Offer
0% p.a. for 18 months
20.74% p.a.
$99 p.a. annual fee for the first year ($129 p.a. thereafter)
finder Exclusive: Receive a long 18-month, 0% p.a., no fee balance transfer and earn Suncorp Rewards Points or Qantas Points per $1 spent.
Virgin Australia Velocity Flyer Card - Bonus Points Offer
0% p.a. for 18 months
20.74% p.a.
$64 p.a. annual fee for the first year ($129 p.a. thereafter)
Earn up to 60,000 bonus Velocity Points in the first 3 months and enjoy a discounted annual fee of $64 for the first year.
St.George Vertigo Platinum - Online Offer
0% p.a. for 24 months with 1% balance transfer fee
12.74% p.a.
$0 p.a. annual fee for the first year ($99 p.a. thereafter)
Platinum card benefits including complimentary insurance, plus first year annual fee waiver and 0% p.a. for 24 months on balance transfers.
Virgin Money Low Rate Credit Card
0% p.a. for 14 months
11.99% p.a.
$49 p.a.
Offers a $49 annual fee, up to $100 cashback when you make a purchase within 3 months and 0% p.a. for 14 months on balance transfers.
Citi Simplicity Card
0% p.a. for 15 months with 1.5% balance transfer fee
19.99% p.a.
$0 p.a.
Save with 5% cashback on eligible purchases (capped at $50 per month) for the first 90 days from approval. Plus, a 15 month balance transfer offer.
NAB Low Fee Card
0% p.a. for 18 months with 2% balance transfer fee
19.74% p.a.
$30 p.a.
Receive complimentary purchase protection insurance, a 18 month balance transfer offer and special offers from Visa Entertainment.
HSBC Platinum Credit Card
0% p.a. for 22 months with 2% balance transfer fee
19.99% p.a.
$0 p.a. annual fee for the first year ($129 p.a. thereafter)
Offers a 0% p.a. for 22 months balance transfer, $0 annual fee for the first year and an annual fee refund each year when you spend $6,000.
NAB Low Fee Platinum Card - Exclusive Amazon Offer
0% p.a. for 24 months with 2% balance transfer fee
19.74% p.a.
$90 p.a.
finder Exclusive: 10% cashback with amazon.com.au for 12 months (capped at $25 per month). Plus, 0% p.a. on balance transfers for 24 months.

Compare up to 4 providers

Credits don’t equal payments

If you buy something from a store and subsequently get a refund it won’t be counted as a payment. On your credit card statement you have a section where payments are listed. A credit won’t show up here, but will instead be in the section below where "Other credits or payments" are listed.

Repay your balance in full

As always, our advice is to repay your outstanding credit card balance in full each and every month whenever possible. It’s the only way to avoid interest and get the maximum benefit from your credit card's interest free days.

Part payments throughout the month are useful because they help minimise the interest you’re charged. If you’re not sure you’ll be able to clear your balance one month, making part payments is a good idea, or as mentioned above, if you’re already in debt they can be a good way to bring your balance back down to $0.

If you’re finding it hard to fully repay your balance or you feel tempted to spend more than you can afford, speak to your bank's customer service team and get them to reduce your credit limit, or see what other options may be available to you.
Images: Shutterstock

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Marc Terrano

Marc Terrano is a content marketer manager at finder. He's been writing and publishing personal finance content for over five years and loves to help Australians get a better deal.

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Citi Clear Platinum - Exclusive Offer
Citi Clear Platinum - Exclusive Offer

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14.99

Annual fee

99
Qantas Premier Everyday
Qantas Premier Everyday

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