What are credit card interest rates?

An introduction to interest rates and how you’re charged for borrowing.

A quick summary

  • Interest rates help tell you the cost of borrowing money.
  •  This cost is shown as a percentage of the money you’ve borrowed.
  • There can be different interest rates for card purchases, balance transfers, money transfers and cash transactions.
  • Interest doesn’t include any application fees, yearly fees, cash withdrawal fees and other extra charges.
  • You should still read the terms and conditions and summary box to see if a card is right for you.

Credit card interest rate basics

When you borrow money on a credit card, you can be charged interest for the service.

The amount of interest you’ll pay is worked out as a percentage of the money you borrow. This is an interest rate.

  • The higher it is is, the more expensive it'll be for you to borrow.
  • The lower it is, the cheaper it'll be for you to borrow.

Watch our short video for more details.

What are credit card interest rates? Watch our short video to find out more.

Are there credit card changes other than interest?

Yes. Aside from interest, you can also be charged various credit card fees – read more about credit card fees . 

Banks often use Annual Percentage Rate (APR), which takes into account both standard fees and interest, to approximate the cost of borrowing with a credit card.

What is APR?

There are different rates of interest for different usages

You can use a credit card in a variety of ways, with some cards better suited to certain uses than others. This is why you should always plan how you intend to use the card first and then pick one accordingly. You should also think about how much you can pay back, and when, so you know how much interest you will be charged.

Purchase rate

The rate of interest you’ll pay when you buy goods or services with your credit card. This is the rate most commonly seen in advertising and APR calculations, for example.

Balance transfer rate

When you move your borrowing from one card to another, this is a balance transfer. You might also be charged a fee to transfer your balance, on top of your balance transfer interest rate.

More on balance transers

Money transfer rate

If you move money directly from your credit card’s available credit limit into a UK current account, this is a money transfer. You might also be charged a fee for this on top of your money transfer interest rate.

More on money transfers

Cash transaction rate

When it comes to cash, your credit card interest rate works differently – as you’ll pay interest from the date of the transaction. There will probably also be fees, such as cash transaction and ATM fees.

More on cash transactions

Let’s look at the details

  • Interest is calculated daily and charged to your credit card statement when it’s produced each month. To see when interest is not charged, please see your Terms & Conditions.

  • A variable interest rate is an interest rate that can change over time – whether up or down.

    This depends on economic conditions, how you manage your account and a variety of other factors.

    A good example is if your credit score changes.

  • An introductory or promotional interest rate is a very low or 0% interest rate/ interest free period given for a set amount of time.

    If you research and plan how you’re going to use the introductory offer, you could reduce the amount of interest you’ll pay overall.

    Just remember to check if any other fees apply.

    And keep an eye on the exact date when your offer runs out and the card returns to its standard interest rate.

    This is usually reflected on your PDF or paper credit card statement in the breakdown of balance section on the transaction pages. You can view your statements online by clicking the ‘View statement’ button next to your credit card, then selecting ‘PDF statements’.

    More about introductory rates

  • Sometimes, the interest rate isn’t the only cost of borrowing with a credit card.

    To account for this, Annual Percentage Rate (APR) considers both a card’s interest rate and any other standard fees.

    This means that the APR percentage offers a more complete picture of how much borrowing will cost.

    Explore APR

How do i find out my credit card interest rate?

To see what your interest rate is, just Log on to Internet Banking or register for Internet Banking if you’ve not already done so. Click the ‘View statement’ button next to your credit card, then select ‘PDF statements’. On the transaction pages of your PDF statement, you will find a breakdown of your credit card balance and the interest rates that apply, along with any expiry dates.

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