Each Zip Money purchase comes with an interest-free period. This is the amount of time you have to pay off that purchase before interest applies.
Your actual interest-free period may be shorter than the advertised promotion, depending on how much you repay each month. Here’s how it works:
If you have no owing balance when you make a purchase
When your account has no outstanding balance, you can estimate the interest-free period on your purchase by dividing the purchase amount by the Minimum Monthly Payment (MMP) that applies to your credit limit.
Example 1
- Your Zip Money credit limit: $3,000
- You purchase a TV for: $2,500
- Retailer promotion: up to 30 months interest free
- Your MMP: $90 per month
$2,500 ÷ $90 ≈ 28 months
In this scenario, your interest-free period will be 28 months (even though up to 30 months was advertised).
If your MMP is not enough to repay the purchase within the promotion
Sometimes your MMP is too low to repay the purchase within the advertised interest-free period. In this case, you will need to pay more than your MMP to avoid interest.
Example 2
- Your Zip Money credit limit: $4,000
- You purchase a fridge for: $3,500
- Retailer promotion: up to 24 months interest free
- Your MMP: $120 per month
$3,500 ÷ $120 ≈ 29 months
Paying only your MMP would take 29 months, which is longer than the 24-month promotional period.
To avoid interest, you would need to increase your monthly repayment to roughly:
$3,500 ÷ 24 months ≈ $145.83 per month
If you already have an owing balance when you make a purchase
If you have an existing balance when you make a new purchase, your MMP is first applied to the purchases with the earliest-ending interest-free period.
This means:
- your new purchase may receive less than the full advertised interest-free period, depending on your other balances
but it will never exceed the promotion you were shown at checkout
What happens if I make another purchase on my account?
If you have multiple purchases, Zip automatically allocates your MMP to the purchase with the earliest expiring interest-free period.
Examples:
- If you have a purchase with 3 months interest free and another with 6 months, your repayments go to the 3-month purchase first
- If you later make a purchase with up to 6 months, your repayments will still go to the purchase with the earliest expiry
- The interest-free period for earlier purchases does not extend, even if your repayments are being directed to another purchase
Your interest-free periods stay the same and will not be lengthened based on how repayments are allocated.
How is interest calculated on my account?
You will only be charged interest on a Zip Money purchase if there is an owing balance after its interest-free period expires.
Once the interest-free period ends:
- Any remaining balance begins to accrue interest at 25.9% per annum
- Interest is calculated daily and charged to your account at the end of each month
- Interest charges will appear clearly on your monthly statement so you can track how much has been applied
Staying on top of your repayments or increasing your monthly payments can help you avoid interest.