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What are credit card interest rates?
When you borrow money on a credit card, you could be charged interest.
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.
How to minimise interest charges
Frequently asked interest questions
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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, check out your Terms & Conditions.
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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.
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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.
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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.
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.
- We’ll pay off balances with a higher rate of interest first. Even if you have a lower promotional rate that is coming to an end.
- When any promotional rates comes to an end, the standard interest rate at that time will apply to the remaining balance.
- If you pay late or miss a payment, you may have to pay fees, lose any promotional offers you have, and it could damage your credit score.
- Other fees and charges may apply.
- Check your latest statement to see the interest rates that apply to your account.