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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.
Let’s look at the details
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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.
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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.
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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’.
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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.
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