The cost of credit.

Credit cards provide a convenient way to spend, online and in stores. If you are using a credit card, it’s important to understand how interest is calculated and charged on your card so you can make smart decisions about your money.   

Purchases vs cash advances

When you use your credit card, interest is charged differently on purchases vs cash advances.


Interest on your purchases is not charged immediately. If you pay your closing balance in full by the due date, there is no interest to pay on purchases. Interest accumulates daily and will be charged on your next statement if you haven’t paid your closing balance by the due date. The interest will continue to add up until the total balance is paid.

Cash advances

If you withdraw cash on your credit card, interest is charged every day, including the day you take the cash out of the ATM. The interest rate on cash advances is usually higher than the rate on purchases.

Depending on which credit card you use, the number of interest-free days on purchases and interest rates you pay for a reoccurring credit card balances (if you don’t pay your balance in full each month) and cash advances will vary depending on which credit card you use. You can see all our credit card interest rates here.

How your payments are applied to your credit card

When you make a repayment on your credit card, it is applied to transactions that appear on your most recent statement, putting higher-interest transactions ahead of lower-interest ones. In almost all cases, your payments are applied in this order:

  1. Fees, such as an account fee or late payment fee.
  2. Interest charges, with cash advance interest paid ahead of purchase interest.
  3. Cash advances.
  4. Purchases.
  5. Any transferred balance from another card.

How to minimise the amount of interest you pay

When you receive your credit card statement, you’ll see the full balance owing is listed, along with a due date and a minimum repayment amount. If you pay the full balance owing, by the due date, you won’t be charged any interest on your purchases.

If you have a balance transfer or any cash advances you will be charged interest on these from the day you completed the transaction until it is paid off.

Because your full balance includes any cash withdrawals, paying the total amount on time will prevent you from paying additional interest on a cash advance. A cash advance on your credit card is a particularly high-interest way to borrow money – if you regularly need to withdraw cash, depending on your circumstances you might like to consider other borrowing options. 

How do interest free days work for Westpac credit card purchases?

Interest free days give you access to interest free credit if you pay off your balance in full by the payment due date. For some cards you can receive up to 44 days interest free credit, others offer up to 55 days – depending on when you make purchases during the month.

If you only pay off part of your outstanding balance by the payment due date, you’ll pay interest on your purchases from the day you made them. To enjoy interest free days on your purchases, you’ll need to pay off the full balance (excluding balance transfers) by the payment due date in a future statement month.

What happens if you only make the minimum repayment?

Making the minimum repayment each month prevents you from being charged late payment fees on top of interest. But paying only the minimum will mean your balance rolls over and continues to be charged interest. If you are also continuing to spend, your credit card balance will increase. If you are having difficulty managing or paying your credit card or other loans, we have tips and help available.

We can help.

Balance transfers

Find out how to consolidate outstanding balances from hire purchase, store cards or another bank’s credit card to a Westpac credit card1.

Learn more

Debt consolidation loan?

Find out how a debt consolidation loan can combine multiple debts into a single loan, with one regular repayment, an end date and no early repayment fees.

Learn more

Credit card payment options

There are lots of ways to make payments to your credit card.

Learn more

Managing Your Money webinars

Our Managing Your Money webinars cover a range of topics and allow you to learn about finances from home.

Learn more

Things you should know.

Balance Transfer Terms and Conditions and lending criteria apply. All applications are subject to Westpac approval. You cannot transfer a balance from a Westpac card or loan. Payments made to your Westpac credit card will first be applied to charges and interest accrued, then to cash advances and purchases, followed by balance transfers. All new purchases, cash advances and any unpaid interest or fees will incur interest at the standard interest rate in accordance with the card's Conditions of Use. You can transfer up to 95% of your available credit card limit. Your card must remain within its credit limit after the balance has been transferred. Balances cannot be transferred to a Mastercard® BusinessCard/Purchasing Card. Balance transfers do not earn Airpoints Dollars™ or hotpoints®. You must close any facilities indicated in this application as being repaid by the balance transfer.

Credit Cards: Eligibility criteria, Lending criteria, terms and conditions apply. Conditions of Use for the applicable card apply. Rates, transaction and services fees apply. Overseas cash advances and foreign currency fees may apply.

Personal Loans: Westpac’s eligibility criteria, lending criteria, terms and conditions apply. An establishment fee of $100 may apply. You’ll need to be 18 or older and a New Zealand citizen or permanent resident. If you’re not a New Zealand citizen or permanent resident but you’re working in New Zealand, or you don’t meet the other criteria, we still may be able to help.

This material on this page is provided for information purposes only, without taking your particular financial situation or goals into account.

Mastercard is a registered trade mark and the circles design is a trade mark of Mastercard International Incorporated.

For details on Airpoints Dollars Advance and Airpoints Dollars Expiry see