Worked Examples and Checklists
Minimum Repayment Warning on your credit card statement: worked example
What the Minimum Repayment Warning on an Australian credit card statement shows, how the figures are calculated under the credit regulations, and an illustrative payoff comparison.
Every Australian credit card statement with an outstanding balance above $50 must show a Minimum Repayment Warning on its front page. It tells you how long it would take to pay off the closing balance if you paid only the minimum each month and made no new purchases, how much interest that would cost, and the monthly payment that would clear the balance in about two years together with the interest you would save. The wording and table are prescribed by regulation 79B of the National Consumer Credit Protection Regulations 2010. In an illustrative example, a $5,000 balance at 20.99% with a minimum of 3% (at least $25) takes over 15 years and about $6,000 of interest to clear, while about $257 a month clears it in two years for about $1,166 of interest.
This guide belongs to the rewards card worked examples. Figures are illustrative; your statement uses your card's actual rate and minimum repayment formula.
What the warning looks like
The regulation sets the form of words. The statement must say, in substance:
It is followed by a table with two rows:
| If you make no additional charges using this card and each month you pay … | You will pay off the closing balance in about … | And you will end up paying an estimated total of interest charges of … |
|---|---|---|
| Only the minimum payment | [period] | [total interest 1] |
| [repayment 2] | 2 years | [total interest 2], a saving of [savings 2] |
The statement must also include a line inviting you to contact the issuer if you have trouble making repayments, with a phone number.
Key rules in regulation 79B:
- It is not required if the outstanding balance is $50 or less, if there is no balance, or if a payment arrangement replaces the normal minimum payments.
- If included, it must be on the front page of the statement.
- The period assumes you pay the stated minimum each month and add no new purchases or advances.
- If more than one rate applies, the issuer may use the purchase rate for the whole balance.
- If paying the minimum would clear the balance in two years or less, the two-year row is optional.
Worked example: $5,000 at 20.99% (illustrative)
Assume a minimum repayment of 3% of the balance or $25, whichever is more. Card minimum formulas vary; some use a percentage, others interest plus a percentage, so check your Key Facts Sheet.
| You pay each month | Time to clear | Total interest |
|---|---|---|
| Only the minimum (3% or $25) | about 15 years 7 months | about $6,020 |
| A fixed $256.90 | 2 years | about $1,166 |
| A fixed $188.35 | 3 years | about $1,781 |
| A fixed $465.54 | 1 year | about $587 |
Saving from paying $256.90 instead of the minimum: about $6,020 − $1,166 = $4,854.
Why the minimum takes so long: in month one, interest is about $5,000 × 20.99% ÷ 12 ≈ $87, and a 3% minimum on the balance is about $152, so only about $65 reduces the debt. As the balance falls, the minimum falls with it, so the debt shrinks slowly until the $25 floor applies.
If the minimum were only 2% of the balance, the illustrative payoff would stretch beyond 50 years, because the minimum barely exceeds the monthly interest. That is why many issuers use a formula with a dollar floor or interest plus a percentage.
Using the warning on a rewards card
The warning appears on rewards cards too, and it is a useful prompt: any balance carried at the rate shown is costing far more than the points earned. Illustrative comparison:
- $5,000 carried for a year at 20.99%: about $1,050 interest.
- Points on $20,000 of spending at 1 point per dollar valued at 0.8c: $160.
If your statement shows the warning month after month, consider moving to a low-rate card, a balance transfer with a firm payoff plan, or a structured repayment plan.
Make a payoff plan
- Take the two-year repayment from your statement as a baseline, or use the credit card payoff calculator to choose your own period.
- Set a fixed direct debit for that amount, not the minimum.
- Stop new spending on the card; use a debit card while paying down.
- Reduce the credit limit online as the balance falls, so it cannot creep back up. See reducing your limit.
- If you cannot meet even the minimum, call the number in the warning and ask about financial hardship under the National Credit Code, and contact the National Debt Helpline on 1800 007 007.
Frequently asked questions
Why does my statement not show the warning?
The balance may be $50 or less, there may be no balance, or a payment arrangement may be in place. If none of these applies, ask your issuer.
Is the two-year figure exact?
It is an estimate using the assumptions in the regulation and the tolerances in the National Credit Code. Daily interest calculation and timing can make your actual figures differ slightly.
Does paying more than the minimum hurt my credit score?
No. Paying on time is what shows on your repayment history; paying more reduces your balance faster. See credit cards and your credit report.
Can my issuer change the minimum repayment?
The minimum is set by the contract. The National Credit Code requires at least 20 days' written notice before a change to the amount or calculation method of minimum repayments.
Sources and where to check
- Federal Register of Legislation — National Consumer Credit Protection Regulations 2010, regulation 79B
- ASIC Moneysmart — credit card calculator and paying off debt
- National Debt Helpline — free financial counselling, 1800 007 007
- Australian Financial Complaints Authority — hardship and fee disputes
