Need help reading this page? Click to activate Recite Me popup.

What are credit card interest rates?

When you borrow money on a credit card, you could be charged interest.

How interest is calculated

The amount of interest you could pay on any credit card borrowing is worked out as a percentage.

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

You might find the APR, or Annual Percentage Rate, useful when making quick comparisons between credit cards, but make sure you read through all details carefully to understand all borrowing costs, including credit card fees and charges.

Watch our video to understand what credit card interest rates are.

For a quick run through, watch our short video.

 

Different rates apply to different things

It’s useful to know that different rates of interest might apply to portions of your balance, depending on transaction type, and whether the standard or a promotional interest rate applies.

Card purchase rates

This is the rate of interest which applies when you pay for goods or services with a credit card. It’s also the interest rate that the APR is based on.

Balance transfer rates

When you move balances from one credit or store card to another, that’s a balance transfer. In addition to interest, a transfer fee might apply.

More on balance transfers

Money transfer rates

When you move funds from a credit card to your UK bank account, that’s a money transfer. In addition to interest, a transfer fee might apply.

More on money transfers

Cash transaction rates

Cash transactions include ATM withdrawals and purchasing foreign currency. As well as interest, cash transaction and non-Sterling transactions fees could apply.

How to minimise interest charges

When offers apply

If there’s a 0% introductory or promotional interest rate on your account, as long as you make transactions within any specified dates, you won’t be charged interest for a set period of time -usually a number of months. It’s important to know that standard interest rates will apply to any remaining balances when a promotional rate expires.

 

To see the interest rates which apply to your account, check out your latest credit card statement.
You can view your statements online by clicking 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, the interest rates that apply and the expiry dates of any promotional or introductory rates.

When offers don't apply

Even if there aren’t promotional interest rates available, if you pay your credit card statement balance in full and on time every month, you won’t be charged interest on card purchases. However, this might not be realistic for people using a credit card to spread the cost of larger purchases, or to consolidate a number of balances.

 

If you can’t pay your whole statement balance each month, it’s a good idea to pay as much as possible to keep any interest costs to a minimum.

Frequently asked interest questions
 

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

  • You might see an interest rate advertised as ‘variable’. That simply means it can change over time, either increasing or decreasing. This can be affected by a number of things, including economic factors, changes to your credit score and how well you manage your account.

  • An introductory rate is usually 0% or a low interest rates, available for a defined period when you take out a new credit card. You may also be offered promotional interest rates once you’ve had your credit card for a while.

    It’s important to know that standard interest rates will apply to any remaining balances when an introductory or promotional rate expires.  Your rates and any expiry dates are usually reflected on your PDF or paper credit card statement in the breakdown of balance section on the transaction pages.

    More on introductory interest rates

  • Sometimes, the interest isn’t the only cost of borrowing. The APR, or Annual Percentage Rate, accounts for other standard costs, such as annual or application fees, giving you a more complete picture.

    More on APR

A summary on credit card interest rates

Interest is charged as a percentage on the money you borrow on a credit card.

 

  • Different rates of interest can apply to different transaction types.
  • Introductory or promotional interest rates could reduce the cost of borrowing.
  • As well as interest, other fees and charges may apply.
  • Check your latest statement to see the interest rates which apply to your account.

Want to read more?