Credit card interest calculations


I was recently charged interest on a credit card cash withdrawal I made (whilst I was in China) which I don’t think I should have been charged interest on. The reason I don’t believe I should pay any interest is because I immediately (a few hours later) deposited back into the VISA account the amount I had withdrawn (plus a little extra for fees etc). However, the way BNZ’s calculations work (as I’ve now been told) mean that my deposit was not used to offset the cash withdrawal as it was on the same day as the withdrawal. If I had deposited the following day I wouldn’t have had to pay any interest, but because I deposited on the same day, I get pinged a high interest at the end of the month. I don’t like this. I feel I have been wronged. And there was no way for me to know that I had an outstanding high interest balance owing.

I don’t like how BNZ choose to not show the current balance of the non-zero-interest-rate amount. Can BNZ please show us the current balance of the outstanding non-zero-interest-rate, please? Clearly BNZ have two balances they are using in their calculations - the amount which has zero interest, and the amount which has interest. Both of these numbers are hidden from the customer. Why are we only shown the total of these two amounts?


Hi there David,

Sorry to hear about the confusion around the cash advance. To avoid interest from being charged when making a cash advance, you need to ensure that the account is in credit before the cash advance is made.

I would like to look at this a bit further for you as it does seem a bit unfair that you were charged interest as you did try to rectify the situation, and I just want to make sure everything is in order on your account. If you could please send us a secure message through Internet Banking (referencing this message), or give us a call, I’m sure we can look at this further for you.

With regards to the Balance Transfer on your credit card, you can see the balance outstanding on your credit card statements. It will show on the last page of your statement each month. To view your statements through Internet Banking (via a computer), please follow these instructions:
• Click on the account you wish to view
• Click on the ‘Statement’ option at the top of the transaction page
• Choose which statement you wish to view from the left hand side
I have also requested that this information is viewable on the Internet Banking page directly, and this is being considered by our web developers.

Thank you, Krystal.

Hi Krystal,

Thanks for your message.

I sent a secure message to BNZ and the staff were kind enough to reimburse the interest charged and put on hold the remaining interest owing, so that’s all good in my personal instance.

But the problem still remains for other customers that haven’t spoken up for themselves. My understanding of the system is that BNZ charges interest from the day a cash advance is made, and that it is NOT POSSIBLE for a customer to repay this cash advance balance (which is hidden from the customer) until the next statement (whenever that may be) is issued. That could be up to a month away. During which time the customer is charged at super-inflated interest rates. At the time the statement is released it is up to the customer to try to find that balance on the online statement (hidden at the bottom) and then repay it. The interest charged for those weeks is thus quite unavoidable. Is my understanding correct? So until the monthly statement is released the customer is unable to see the cash advance balance, and until that statement is released it is not possible to repay the cash advance balance.

It seems to me that the system needs to be fixed a little here.

For your information, in China I was unable to make purchases using a foreign (NZ) bank card, so I was obliged to make withdrawals using my credit card from an ATM. I couldn’t see any way of avoiding doing this.


Hi David

I’m not a BNZ staff, but have researched into this before.

In the payments sections of the T&Cs:

" How we apply payments: We will determine the way
payments to your Credit Card Account are applied. We generally
(but are not required to) apply payments in the following order:
a. to the ‘current balance’ shown on your statement, in
descending order of amounts attracting the highest
interest rate to those attracting the lowest interest rate. We
will apply payments to those amounts in the order of:
i. fees;
ii. interest;
iii. transactions.
b. Where the ‘current balance’ has been repaid, we will apply
payments to any fees, interest and Transactions debited
since your last statement, in the same manner as above.
Regardless of the above, if you have made a payment that
results in your Credit Card Account having a credit balance, that
credit will be applied to any future Transactions in the order
that those fees, interest and Transactions are made or debited
from your Credit Card Account"

I think the reasons you’re facing the problems is to do with ‘hierachy of payments’.

Payments will always go to STATEMENTED items first, before NON-STATEMENTED items.
STATEMENTED items means what is already listed in your most recent bill (items that show up on your Online Banking does not count… only those in your last statement).

So say, if your 20 August bill is showing $352 due to pay, and now (9 Sep) you withdraw $100 from an overseas ATM, you must pay $452 to clear off the $100 cash advance.

This becomes more complicated if since 20 August, you made some purchases, say $50.

In this instance, paying $452 on 9 September will pay off the $352 from the last statement, $50 from the purchases… and you have $50 there, getting ready to pay off the $100 that will hit your account the next day.

But paying on 11 September (the next working day), when the Cash Advance had shown up, paying $452 will pay off $352 from the last statement, $100 from the cash advance, and you still have $50 from the purchases that is not yet paid.

Hope this helps!

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Hi Taless85,

Yes, your explanation helps. Thanks. I think I understand it now. I don’t necessarily like it, but I now understand it. I see it as BNZ’s / Visa’s way of sneakily getting an income from its customers who think they’re getting something for free. The Visa service isn’t really free. It just has these “gotchyas” like this one that catch you unawares. And it’s easy to just be complacent about it and pay the interest. But it isn’t healthy.

So in summary the only way to avoid paying interest when a cash advance is made, is to COMPLETELY pay off the account so that it is no longer in credit at all. I guess that’s fair enough.

I feel like I’m a fish in the water and the bank has got me “hooked” - used to being in “free” debt with Visa - and now they can give a few little tugs to see if they can reel me in and sting me with their super inflated interest. If I complain, they refund the interest. If I don’t complain, then “game on”.

I really wonder how many customers out there pay super inflated interest on their Visa accounts… I, for one, try to avoid this.