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					How credit cards work How credit cards work

How credit cards work
The basics
How credit cards work provides a basic overview of how a credit card account operates. It should be used as a guide; for detailed information on your ANZ credit card account please refer to your ANZ Credit Card Conditions of Use booklet. If you would like a copy of the booklet please call us on 13 22 73. A credit card lets you use your financial institution’s money as a short-term loan to buy something you want now, and you then pay for it later. When used properly a credit card can be a great tool for managing your finances. Your financial institution may also offer you special promotional offers on your card. If you accept a promotional offer, it may mean the amount of interest you pay and other repayment terms on your credit card could differ. An example of a promotional offer is when you make a purchase with your credit card now but pay back your purchase in equal instalments over a set period. This brochure is a guide only and will not explain variations on how your credit card works where special promotional offers apply. Where applicable, you should refer to the Terms and Conditions for any promotional offers.

Choosing the right card
The type of credit card you choose should depend on whether you generally plan to pay the full closing balance on time every month, or if you need to space your repayments over time. Where special promotional offers are available, you should also consider alternate repayment options available and whether they suit your needs. Some cards also offer reward programs, where you can earn points and use them to redeem rewards such as vouchers, air miles or merchandise.

How much credit can I get?
The amount of credit (credit limit) you are eligible for is calculated based on the financial and other information you provide to your financial institution when you apply for a credit card. They look at your employment history, what you earn, your expenses, other debts, repayment history, things you own and so on to determine your credit limit. If the credit limit is higher than you need, you can ask for it to be reduced.

What if I spend over my credit limit?
If a transaction takes you over your credit limit, you must pay the excess amount immediately. Your financial institution may charge an over limit fee or close your card.


Using your card
When you use your card, your transaction details are sent from the retailer or service provider to your financial institution. Your available credit is then reduced by the amount of the transaction and the details are recorded on your credit card statement. It’s important to carefully check the transaction amount and other details before you authorise the transaction, and again when you receive your statement, to ensure that purchases match the transactions recorded.

Aside from purchases how else can I use the available balance on my credit card?
You can also use your credit card for cash advances, balance transfers and where available, promotional offers. Refer to below for more information.

Checking statement charges
If you find a charge on your statement that you do not recognise the first thing to do is check your receipts. You may have forgotten about a transaction made earlier in the month. Some merchants also have a trading name that is different from the name that appears on the statement. Or, a transaction may have been made by an additional cardholder. If you still believe you’ve been incorrectly charged, the first step is to contact the merchant. If you are unhappy with the result, contact your financial institution’s credit card division. If your financial institution agrees you’ve been incorrectly charged, and you have notified them within a reasonable time, they will reverse the charge and process a refund to your account.

Fees and charges
Fees and charges vary between credit cards and are charged for: > account maintenance (for example, annual and rewards program fees) > exception fees (for example, late payment or over limit fees) > some transactions (for example, if you withdraw cash using your credit card).

What is a cash advance?
A cash advance occurs when you use your credit card to get cash from a branch or ATM or make a cash equivalent transaction.



What is a balance transfer?
A balance transfer is where you transfer the balance from one financial institution’s credit card to another financial institution’s credit card.

What is a promotional offer?
From time to time your financial institution may also offer you special promotional offers on your account for example reduced interest on a portion of the balance. Another example of this

may be a special rate on purchases you make at a particular store. If you accept one of these offers, interest charged on these offers will be displayed separately on your statement.
Some promotional offers have no interest free days. You should check the specific promotional offer Terms and Conditions on any offers you’ve accepted for more details.

What is a primary cardholder?
The primary cardholder is the person who opens the account and is responsible for any outstanding balances on the account. Some financial institutions allow the primary cardholder to nominate additional cardholders, who can use the credit card account in addition to the primary cardholder. The primary cardholder is responsible for any outstanding balance on the account. That is why it’s very important to think carefully about making another person an additional cardholder, to agree with them how the card will be used, and to monitor that usage over time.

Information on the statement
Credit card statements are usually issued monthly and include: > details of transactions made for that statement period > interest and other charges > a running balance > payments made and payments due. Always read your statement carefully and make sure that you understand your obligations as a credit card holder. Statement information varies for each financial institution. However you should always check the amount you owe (your closing balance) and when the monthly minimum payment has to be paid, the amount of credit you’ve used, and the amount of credit available to you.

How much do I have to pay?
To minimise interest, try to pay the closing balance in full every month by the day the payment is due. If you have special promotional offers on your account, the full closing balance on your account may not be required to be paid in full. Please check


the Conditions of Use applicable to the card and the specific promotional offer Terms and Conditions. If you’re not able to pay the closing balance, you should pay part of it, and at least the minimum payment. The minimum payment is the least amount you must pay each month to keep operating your account. If you don’t pay the minimum payment by the due date, your financial institution may charge a late payment fee and stop or close your credit card.

How can I pay my statement?
Most financial institutions offer a range of payment options which are usually listed on your statement.

Understanding Interest
What is interest?
Interest is a charge for providing credit. Interest is applied to the daily outstanding balance on purchases, cash transactions, balance transfers, promotions, interest from previous months and fee charges. “Purchase interest” applies to goods and services you buy using your card. “Cash interest” is charged on cash advances and cash equivalent transactions, for example, when you withdraw cash from a branch or an ATM or buy travellers cheques.

How is interest calculated?
Interest is calculated on the daily outstanding account balance and is applied at the end of the statement period. The daily interest rate (Annual Percentage Rate divided by 6) is used for this calculation. Where special rates apply, for example, in the case of a balance transfer or promotional offer, the rate that applies to the offer will be used to calculate the daily interest rate on that part of the balance.

When is interest charged?
For interest free period cards, interest on purchases is charged if the closing balance is not paid off in full by the statement due date each month. For cards with no interest free period, interest is charged from the date a transaction is made. Interest is charged on cash transactions and balance transfers from the date they are made until the amount of the



transaction is paid off in full. There is no interest free period for these transactions. Please check the conditions of any offers accepted for more details.

What is an interest free period?
The maximum interest free period is the number of days in the monthly statement cycle plus the number of days to the payment due date.

When will I stop seeing interest billed on my statement?
Once you make your next full payment by the due date, your interest free days benefit for purchases will automatically reinstate. However, interest is charged to your account up until the full payment is received. A final interest charge will appear on your next statement. No purchase interest will be shown on future statements while the full closing balance on each statement is paid in full by the due date. Interest will still be charged on any cash advances, balance transfers and cash equivalent transactions from the date of the transaction plus the interest and fees charged in previous months. Some promotional offers may also work this way.

How can I avoid paying interest?
Use a card with an interest free period. Always pay the account balance in full by the due date. Avoid cash advance and cash equivalent transactions. Make sure you understand how any promotional offers you accept work.

Common questions
What happens if I pay the full closing balance on time (by the due date), every month? If you have a card with an interest free period, you won’t pay any interest on purchases. Interest will still be charged on any cash advances and cash equivalent transactions from the date of that transaction. Some promotional offers may also work this way. What if I don’t pay the full closing balance off by the due date? If you have a card with an interest free period, you’ll be charged interest on purchases, cash transactions, interest from previous months and fee charges for that statement period, and on subsequent statement periods, until your closing statement balance is paid in full and on or before the due date of the latest statement.

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If you have a card with no interest free period, interest is charged daily on all transactions regardless of whether you pay the full closing balance off by the due date. What happens if I pay the full closing balance a few days after the due date? Since you have not paid off the full closing balance by the due date and you have a card with an interest free period, you will lose the interest free benefit for that period. You could also be charged additional fees for the late payment.

Some useful tips for using credit
> Always try to pay your closing balance in full by the due date. You can confirm your payment has been received or check your current balance using ANZ Phone Banking – 13 13 14 or ANZ Internet Banking – www.anz.com > Always pay at least the minimum payment by the due date, including any amount due immediately. > Ensure your credit card limit is realistic and manageable. Contact us straight away on 13 22 73 if you have any concerns. > To suit your individual needs, we have various payment options available. Contact us on 13 22 73 or visit us at www.anz.com for further information.

For more information on ANZ credit cards, please call 13 22 73, visit www.anz.com or ask at your nearest ANZ branch.



www.anz.com

Australia and New Zealand Banking Group Limited (ANZ) ABN 11 00  . ANZ’s colour blue is a trademark of ANZ. Item No. 8019 10.00 W1


				
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