Paying the closing balance on your credit card in full

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.

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.

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Name	Purchase rate p.a.	Bonus points	Points per $ spent	Interest-free period	Balance transfer rate p.a.	Annual fee
Kogan Money Card – Exclusive Offer ExclusiveKogan Rewards Program	Purchase rate p.a. 20.99%	Bonus points N/A	Points per $ spent 1	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 0% for 18 months with 1% balance transfer fee, then 21.74%	Annual fee $0	Go to siteMore Info Compare	Get 0% p.a. on balance transfers for 18 months with a 1% balance transfer fee. Plus an ongoing $0 annual fee.
Westpac Low Rate Card	Purchase rate p.a. 13.74%	Bonus points N/A	Points per $ spent N/A	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 0% for 28 months, then 21.49%	Annual fee $59	Go to siteMore Info Compare	Save with a 0% p.a. interest rate on balance transfers for 28 months. Plus, a low 13.74% p.a. purchase interest rate.
Westpac Low Rate Card - Cashback Offer	Purchase rate p.a. 13.74%	Bonus points N/A	Points per $ spent N/A	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a.	Annual fee $59	Go to siteMore Info Compare	A no-frills card offering up to $350 cashback: $50 each month you make at least $1,000 of eligible purchases for the first 7 months.
Qantas Premier Platinum Qantas Frequent Flyer	Purchase rate p.a. 19.99%	Bonus points 80,000	Points per $ spent 1	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 0% for 12 months, then 21.99%	Annual fee $349 first year ($399 after)	Go to siteMore Info Compare	Earn up to 80,000 bonus Qantas Points. Plus, save with a reduced first-year annual fee and 0% p.a. for 12 months on balance transfers.
American Express Platinum Edge Credit Card Membership Rewards	Purchase rate p.a. 23.99%	Bonus points N/A	Points per $ spent 1	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a.	Annual fee $0 first year ($195 after)	Go to siteMore Info Compare	Save with a $0 annual fee in the first year. Plus, $200 travel credit every year.
American Express Velocity Escape Card Velocity Frequent Flyer	Purchase rate p.a. 23.99%	Bonus points N/A	Points per $ spent 0.75	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a.	Annual fee $0	Go to siteMore Info Compare	Save with an ongoing $0 annual fee and earn 0.75 Velocity Points per $1 on everyday purchases.
NAB Low Rate Credit Card	Purchase rate p.a. 12.49%	Bonus points N/A	Points per $ spent N/A	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 0% for 28 months with 2% balance transfer fee, then 21.74%	Annual fee $0 first year ($59 after)	Go to siteMore Info Compare	Get a 0% p.a. interest rate on balance transfers for the first 28 months (with a 2% BT fee). Plus, save with a $0 first-year annual fee.
American Express Velocity Platinum Card Velocity Frequent Flyer	Purchase rate p.a. 23.99%	Bonus points 60,000	Points per $ spent 1.25	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a.	Annual fee $375	Go to siteMore Info Compare	Get 60,000 bonus Velocity Points when you spend $3,000 in the first 3 months. Plus a return domestic flight each year.
Virgin Money Low Rate Credit Card	Purchase rate p.a. 11.99%	Bonus points N/A	Points per $ spent N/A	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 0% for 15 months, then 21.69%	Annual fee $99	Go to siteMore Info Compare	Offers 0% p.a. for 15 months on balance transfers, with no balance transfer fee.
American Express Essential Credit Card Membership Rewards Gateway	Purchase rate p.a. 18.99%	Bonus points N/A	Points per $ spent 1.25	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a.	Annual fee $0	Go to siteMore Info Compare	Get up to 1.25 Membership Rewards points per $1 on eligible spending and an ongoing $0 annual fee.
Qantas Premier Everyday Qantas Frequent Flyer	Purchase rate p.a. 19.99%	Bonus points 8,000	Points per $ spent 0.75	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 0% for 12 months, then 21.99%	Annual fee $49	Go to siteMore Info Compare	Get 2 bonus Qantas Points per $1 spent on eligible purchases in the first 4 months (up to 8,000 points), plus complimentary insurance.
American Express Explorer Credit Card Membership Rewards	Purchase rate p.a. 23.99%	Bonus points 50,000	Points per $ spent 2	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a.	Annual fee $395	Go to siteMore Info Compare	Get 50,000 bonus Membership Rewards Points when you spend $4,000 in the first 3 months.
St.George Amplify Signature Amplify Rewards	Purchase rate p.a. 19.49%	Bonus points 150,000	Points per $ spent 1.5	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 0% for 24 months with 1% balance transfer fee, then 21.49%	Annual fee $199 first year ($295 after)	Go to siteMore Info Compare	150,000 bonus Amplify Points (worth $675 in gift cards) when you spend $12,000 in the first 12 months. Plus, a first-year annual fee discount.
American Express Business Explorer Credit Card Membership Rewards Gateway	Purchase rate p.a. 23.99%	Bonus points 75,000	Points per $ spent 2	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a.	Annual fee $149	Go to siteMore Info Compare	ABN holders w/ $75,000 revenue. Get 75,000 bonus points when you spend $3,000 in the first 3 months.
American Express Low Rate Credit Card	Purchase rate p.a. 10.99%	Bonus points N/A	Points per $ spent N/A	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a.	Annual fee $0	Go to siteMore Info Compare	Offers a low ongoing interest rate of 10.99% p.a. and a $0 annual fee. Plus, complimentary purchase cover.
American Express Platinum Business Card Membership Rewards Ascent Premium	Purchase rate p.a. 0%	Bonus points 200,000	Points per $ spent 2.25	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a.	Annual fee $1,750	Go to siteMore Info Compare	ABN holders w/ $75,000 revenue. Get 200,000 bonus Membership Rewards points when you spend $8,000 in the first 3 months.
Virgin Australia Velocity Flyer Card - Balance Transfer Offer Velocity Frequent Flyer	Purchase rate p.a. 20.74%	Bonus points N/A	Points per $ spent 0.66	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 0% for 24 months, then 20.99%	Annual fee $0 first year ($129 after)	Go to siteMore Info Compare	Get 0% p.a. on balance transfers for 24 months (with no BT fee) and a $0 annual fee in the first year.
Coles No Annual Fee Mastercard Flybuys	Purchase rate p.a. 0% for 6 months, then 19.99%	Bonus points 20,000	Points per $ spent 0.5	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 19.99%	Annual fee $0	Go to siteMore Info Compare	Get 20,000 bonus Flybuys points (worth $100 Flybuys Dollars) and 0% interest on purchases for the first 6 months.
Latitude 28° Global Platinum Mastercard	Purchase rate p.a. 26.99%	Bonus points N/A	Points per $ spent N/A	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a.	Annual fee $0	Go to siteMore Info Compare	Save with 0% international transaction fees on purchases. Plus, complimentary Flight Delay Pass and global data roaming.
St.George Vertigo Card - Cashback Offer	Purchase rate p.a. 13.99%	Bonus points N/A	Points per $ spent N/A	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 6.99% for 12 months, then 21.49%	Annual fee $55	Go to siteMore Info Compare	Get up to $400 cashback at eligible supermarkets and petrol stations in the first 180 days. Plus, a low interest rate for purchases.

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