Credit Card Calculator
How much is your credit card actually costing you, and how does it affect your home loan?
Credit card debt is expensive, and credit card limits hurt your borrowing power even when your balance is zero. Use this calculator to understand both.
How does it work?
A credit card calculator estimates how long it will take to pay off your credit card balance based on your current balance, the interest rate, and your monthly repayment amount. It also shows you the total interest you will pay if you only make minimum repayments. Understanding your credit card position matters for home loan applicants because lenders assess your credit card limit (not just your balance) as a financial commitment that reduces your borrowing power.
The calculator has been provided in good faith as a guidance tool only. Results are not financial advice, are a guide only, and are not a guaranteed outcome or quote. Borrowers should always discuss their individual situation with an Australian Credit Licensee or authorised Credit Representative.
How credit cards affect your home loan application?
Lenders assess your credit limit, not your balance
This surprises almost everyone. Even if your credit card balance is zero, lenders treat your credit limit as a financial commitment because you could draw that money at any time. A $10,000 credit card limit typically reduces your borrowing power by around $50,000 to $60,000 depending on the lender. Reducing your limit before applying can make a meaningful difference.
Minimum repayments count as a commitment
If you carry a balance, the minimum repayment is treated as an ongoing commitment that reduces your assessed income available for mortgage repayments.
Multiple cards multiply the impact
If you have two or three credit cards, even if rarely used, each one's limit reduces your borrowing power. Consolidating or closing cards you do not need before applying is worth considering.
Credit card tips for home loan applicants
• Reduce your credit card limit to the minimum you genuinely need before applying for a home loan.
• Pay off your balance in full before applying where possible.
• Close credit cards you do not use. The limit still counts against you even if the balance is zero and you have not used the card in months.
• Do the same for buy now pay later accounts like Afterpay and Zip.
• Avoid applying for new credit in the 3 to 6 months before applying for a home loan.
Credit card questions we get asked a lot
-
Cancelling a card removes the limit from your assessed commitments, which can improve your borrowing power. However, it can also create a credit enquiry record if the process involves a credit check. Generally, reducing the limit first and cancelling if possible before you apply is a sensible approach. Discuss your specific situation with us before making changes.
-
Paying off a balance helps your credit score over time and demonstrates responsible use. A positive credit history with consistent on-time payments is more valuable to lenders than a zero balance on its own. Consistently making minimum payments late has a more negative impact than having a balance.
-
Ideally 3 to 6 months before applying. This gives the lender a clear picture that the reduced limit reflects your ongoing situation rather than a last-minute change before the application.
-
Generally lenders do not like to see large purchases on credit in the period before settlement. If you use your credit card for expenses like building inspections or moving costs, pay it off promptly and do not let it carry a significant balance into your application window.
Want to know exactly how your credit cards are affecting your borrowing power?
We can run through your full financial picture and help you work out what to do before you apply.