What Are Credit Card Interest Rates

• Interest is the cost you pay for borrowing on a credit card.

• It is expressed as an Annual Percentage Rate (APR).

• Charged only when full payment is not made by due date.

• Different rates may apply for purchases, cash advances, and balance transfers.

• Interest rates vary by card type and user credit profile.

When Interest Is Charged

• If you don’t pay the full balance by the due date.

• On cash withdrawals from the date of transaction.

• When paying only the minimum amount due.

• After the end of the interest-free grace period.

• On carried forward balances until fully cleared.

Types of Credit Card Interest

• Purchase interest is charged on unpaid purchases.

• Cash advance interest applies to ATM withdrawals.

• Balance transfer interest is on moved balances from another card.

• Promotional interest rates may apply for limited periods.

• Penalty APR can be imposed for repeated missed payments.

How It’s Calculated

• Daily interest is computed using the daily rate formula.

• Daily rate = APR ÷ 365 days of the year.

• Multiply daily rate with daily balance to find interest.

• Interest adds up daily until balance is repaid.

• Compounded interest increases overall dues over time.

Tips to Manage Interest Charges

• Always pay the full amount before the due date.

• Avoid using the card for cash advances.

• Track spending to stay within budget and avoid rollover.

• Know your card’s billing cycle and grace period.

• Use low-interest or 0% APR cards for big purchases.