Credit Contracts and Consumer Finance Act 2003

Consumer credit contracts - Interest charges

38: Early debit or payment of interest charges prohibited

You could also call this:

"No paying interest before it's due"

Illustration for Credit Contracts and Consumer Finance Act 2003

You cannot be made to pay interest charges before they are due. A creditor cannot take the interest charges from your account before the day they apply to. You can be charged interest after the day it applies to. You might have to pay interest charges early in some situations. This can happen if it is the first time you are being charged interest. It can also happen if the interest is taken out on the last day of the period. In some cases, interest can be taken out early without being part of the amount you owe for that day. This can happen if the interest is taken out on the last day of the period and is not used to calculate more interest. The creditor must follow these rules when dealing with your consumer credit contract.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM212784.

This page was last updated on 1 January 2026 — View changes

Topics:

Money and consumer rights > Consumer protection

37: Creditor to ensure that contract specifies annual interest rate or rates, or

"Lenders must clearly state the annual interest rate in your loan contract."

39: Limit on interest charges, or

"There's a limit on how much interest you can be charged on a loan."

Part 2Consumer credit contracts
Interest charges

38Early debit or payment of interest charges prohibited

A creditor must not, at any time before the end of a day to which an interest charge applies, require payment of or debit the interest charge.
A consumer credit contract may provide for an interest charge to become payable or to be debited at any time after the day to which it applies.
Subsection (1) does not apply to the following:
the first payment or debiting of interest charges under a consumer credit contract if the payment or debiting relates to interest charges for a period that is less than the normal period for which interest charges are to be periodically debited to the debtor's account:
the debit of an interest charge under a consumer credit contract before the end of the period to which the charge applies if—
1. the charge is debited on the last day of the period; and
2. the amount debited is not treated by the creditor as part of the unpaid daily balance for that day for the purpose of calculating interest charges under the contract.