Paying the closing balance on your credit card in full

You can say goodbye to paying interest, avoid more debt and even improve your credit score when you pay your credit card balance in full each month.

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When you get your credit card statement, you will see the account's closing balance, the date that a payment is due and the minimum amount you need to pay by that date (among other credit card statement features). The closing balance on your credit card statement is the total amount owed, or what's left for you to pay off based on all the transactions and payments you have made during that statement period.

If you can afford to pay off your card's closing balance in full by the due date on your statement, you will save on interest charges – especially if you have a card that offers interest-free days on purchases. Plus, paying off your credit card could help improve your credit score by adding positive details to your payment history. Let's take a closer look at how it works in this guide.

How does paying my card's closing balance help me save on interest?

Credit card interest is typically calculated daily, based on your balance at the end of that day, and then charged to your account each month (at the end of your statement period). This means any payment you make will reduce your balance and the amount of interest that accrues on it. And when you pay your card's closing balance in full by the due date on your statement, none of those transactions will be carried over to the new statement period. You could think of it as a way of wiping the slate clean each month.

Paying off your entire credit card balance also gives you a way to avoid interest charges completely if you have a card that offers interest-free days on purchases (and plenty do). With interest-free days, the purchases you make between the start and end of your statement period will not be charged interest, as long as you pay off your full balance by the due date on your statement. If you want to learn more about how interest-free days work, this Finder guide breaks it down in detail.

How can paying my credit card's balance help my credit score?

Your credit score is based on the details listed on your credit file, including your repayment history for credit cards, loans and other credit products. Paying off your credit card (and other accounts) on time helps build up good credit history, which can also help you improve your credit score.

On the flipside, if you have late payments or defaults on your credit history, it will have a negative impact on your credit score. One important detail to be aware of with your credit card is that you only need to pay the minimum amount by the due date on your statement to meet the repayment requirements. But if you can pay more, you should do that to help reduce or avoid interest charges.

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What's the difference between paying the minimum and the full balance on my card?

The minimum repayment is what you must pay back each month and it is usually 2-3% of the total account balance. Paying this will help you avoid late payment fees and bad credit history. But if you only pay the minimum amount, you will be charged interest on the balance of your account. To avoid interest, you can pay the full amount owing, which is based on how many purchases you have made on the card during the statement cycle.

As an example, let’s say you spent $2,000 on a credit card with a minimum payment of 3%. The minimum you would have to pay off your statement by the due date would be $60. But the remaining $1,940 would attract interest until you paid it all off. So if you wanted to avoid interest charges, you would have to pay off the full $2,000 by the due date on the statement. It is recommended that you pay as much of your outstanding balance as you can each month. It can take years to clear your balance by only paying the minimum amount and in some cases you may never be able to pay off your card.

Tips to help you pay your credit card balance in full

  • Set up an autopay. An automated payment from your transaction account to your credit card allows you to pay the minimum amount due, a partial amount or the whole balance every month. To set up this payment option, complete and return an automatic payment plan form to your credit card provider, including details of your chosen transaction account and the amount you want to be paid off each month. You can also set up autopay by calling your financial institution.
  • Change your statement date. Some credit card providers let you change the date that your statements are issued so that they line up with when you’re paid. For example, if you’re paid monthly on the first of the month, you could request to have your statement due date fall then or a week later so that you will have funds ready to pay it off. Call your credit card provider to discuss and set up this option.
  • Set calendar reminders. Set up reminders using your phone or computer so you never miss a payment due date. A calendar on the fridge can be a good reminder too.
  • Request a lower credit limit. This will help limit how much you spend on your credit card. Choosing a limit that you can afford to pay off each month also means you can make the most of interest-free days for your purchases.
  • Create a budget. If you want to be more hands-on, you can create a budget to find out where you can cut back on expenses in order to pay your card balance in full each month. A budget lets you see how much you have coming in and how much is going out, as well as where it all goes.
  • Set up a dedicated account. Open a transaction or savings account just for the money you plan to use on credit card repayments. A savings account will cost you nothing and you can get rewarded with bonus interest when you make regular deposits. Want to take it to the next level? If you have a mortgage with an offset account, here's how you could use it in combination with a credit card to save interest on your mortgage and your credit card.

As a general guide, if you can afford to pay your credit card balance in full each month, then it will save you money and give you the option of making interest-free purchases. But if it's not possible to pay off the entire balance, choose an amount that is affordable – even if it's only the minimum amount required. Then aim to clear the rest when you can afford to do so.

Compare credit cards with 55 interest-free days

Name Product Purchase rate Interest-free period Balance transfer rate Annual fee
HSBC Platinum Credit Card
19.99% p.a.
Up to 55 days on purchases
0% p.a. for 36 months
$29 annual fee for the first year ($129 p.a. thereafter)
Save money with a 0% balance transfer rate for 36 months (with no BT fee), a first-year annual fee discount and free travel insurance.
Citi Clear Card - Balance Transfer Offer
14.99% p.a.
Up to 55 days on purchases
0% p.a. for 36 months
$99
Offers 0% p.a. on balance transfers for 36 months with no balance transfer fee. Plus, complimentary insurance covers.
Westpac Low Rate Card
13.74% p.a.
Up to 55 days on purchases
0% p.a. for 28 months with 1% balance transfer fee
$0 annual fee for the first year ($59 p.a. thereafter)
Save with a $0 annual fee for the first year, plus, a 0% interest rate on balance transfers for 28 months.
Citi Premier Qantas Card
21.49% p.a.
Up to 55 days on purchases
0% p.a. for 6 months
$175 annual fee for the first year ($350 p.a. thereafter)
Get 100,000 bonus Qantas Points when you spend $4,000 in the first 90 days and a first-year annual fee discount.
Westpac Low Rate Card - Cashback Offer
13.74% p.a.
Up to 55 days on purchases
6.99% p.a. for 12 months
$0 annual fee for the first year ($59 p.a. thereafter)
Get $400 cashback when you spend $4,000 on eligible purchases within the first 4 months. Plus, a $0 first-year annual fee.
Bankwest Breeze Classic Mastercard
0% p.a. for 15 months, reverts to 9.9% p.a.
Up to 55 days on purchases
0% p.a. for 15 months
$0 annual fee for the first year ($49 p.a. thereafter)
Save with 0% p.a. on purchases and balance transfers for 15 months (with no BT fee). Plus, a $0 first-year annual fee.
humm90 Mastercard
23.99% p.a.
Up to 110 days on purchases
$99
Enjoy up to 110 days interest-free on purchases, 0% foreign transaction fees and flexible instalment plan options.
Qantas Premier Platinum
19.99% p.a.
Up to 55 days on purchases
0% p.a. for 18 months with 1% balance transfer fee
$199 annual fee for the first year ($299 p.a. thereafter)
Earn 90,000 bonus Qantas Points when you spend $3,500 in the first 3 months and save with a reduced first-year annual fee.
Bendigo Bank Low Rate Credit Card
0% p.a. for 18 months, reverts to 11.99% p.a.
Up to 55 days on purchases
13.99% p.a.
$45
Save on interest costs with 0% p.a. on purchases for up to 18 months (reverts to 11.99% p.a.). Plus, a $45 annual fee.
Citi Clear Card - Cashback Offer
14.99% p.a.
Up to 55 days on purchases
0% p.a. for 15 months
$49 annual fee for the first year ($99 p.a. thereafter)
Get $250 cashback when you spend $3,000 in the first 90 days. Plus, free wine when you dine and purchase insurance cover.
ANZ Frequent Flyer Platinum
20.24% p.a.
Up to 55 days on purchases
20.24% p.a.
$0 annual fee for the first year ($295 p.a. thereafter)
Now offering Cashrewards Max. Receive 70,000 bonus Qantas Points when you spend $2,500 on eligible purchases within 3 months. Plus, a $0 first-year annual fee.
Kogan Money Black Card - Exclusive Offer
20.99% p.a.
Up to 55 days on purchases
0% p.a. for 30 months
$0
Save with a $0 annual fee and a 0% introductory rate on balance transfers. Plus, earn $50 Kogan.com Credit and uncapped rewards points.
St.George Vertigo Card
13.99% p.a.
Up to 55 days on purchases
0% p.a. for 32 months
$0 annual fee for the first year ($55 p.a. thereafter)
Get a 0% interest rate on balance transfers for 32 months (with no balance transfer fee) and a $0 annual fee for the first year.
American Express Platinum Edge Credit Card
20.74% p.a.
Up to 55 days on purchases
$195
Earn 50,000 bonus points when you spend $1,500 within the first 3 months. Plus, a $200 statement credit offer.
ANZ Low Rate
12.49% p.a.
Up to 55 days on purchases
0% p.a. for 30 months
$0 annual fee for the first year ($58 p.a. thereafter)
Now eligible for Cashrewards Max. Save with 0% p.a. on balance transfers for 30 months (with no BT fee) and $0 first-year annual fee. Plus a 12.49% p.a. purchase interest rate.
Bank of Melbourne Vertigo Card
13.99% p.a.
Up to 55 days on purchases
0% p.a. for 32 months
$0 annual fee for the first year ($55 p.a. thereafter)
Save with a 0% interest rate on balance transfers for 32 months (with no balance transfer fee) and a $0 annual fee for the first year.
St.George Amplify Platinum
19.49% p.a.
Up to 55 days on purchases
0% p.a. for 24 months with 1% balance transfer fee
$49 annual fee for the first year ($99 p.a. thereafter)
Earn 130,000 bonus Amplify Points (worth $550 in gift cards) when you spend $3,000 in the first 90 days. Plus, a first-year annual fee discount.
Bankwest Zero Platinum Mastercard
14.99% p.a.
Up to 55 days on purchases
0% p.a. for 34 months with 2% balance transfer fee
$0
Get 0% p.a. on balance transfers for 34 months (with a 2% BT fee), ​an ongoing $0 annual fee and 0% foreign transaction fees.
American Express Velocity Escape Card
20.74% p.a.
Up to 55 days on purchases
$0
Get 0.75 points on your everyday purchases, uncapped, and a $0 annual fee for the life of the card.
NAB Low Rate Credit Card
12.99% p.a.
Up to 55 days on purchases
0% p.a. for 32 months
$0 annual fee for the first year ($59 p.a. thereafter)
Get a 0% interest rate on balance transfers for the first 32 months (with no BT fee). Plus, save with a $0 first-year annual fee.
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