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Credit Card interest explained

Credit Card interest explained
 

What is Credit Card interest?

What is Credit Card interest?

When you use your Credit Card, you are borrowing money – and will be charged interest unless you repay the full closing balance within the specified period. The amount of interest you will be charged depends upon:

  • The interest rate of your Credit Card
  • The amount you spend
  • When you spend it
  • When you pay your Credit Card bill

When you receive your statements, the details of your purchases and the amount of interest you have been charged will be clearly displayed.

How is Credit Card interest calculated?

How is Credit Card interest calculated?

  • Interest is calculated on any unpaid balance from the due date of your previous month’s statement. It is applied to your closing balance at the end of each day and then added up to make the current statement1.

  • To avoid paying interest you need to pay off your total Credit Card closing balance by the statement due date.

What are Interest Free Days?

What are Interest Free Days?

  • 'Interest Free Days' simply refers to the time from when you buy something using your Credit Card to when interest is applied to that purchase – which could be up to 25 days following the end of your statement period, depending on your Card.
  • To maximise your Credit Card's Interest Free Days, make your purchase on the day a new statement period begins and pay the closing balance by the due date shown on your statement.
  • In the example below, the Credit Card has 55 Interest Free Days and assumes that the previous month's balance has been paid in full.

Charge Card or Credit Card – what’s the difference?

Charge Card or Credit Card – what’s the difference?

A Charge Card is similar to a Credit Card in that they’re both convenient ways to pay for goods and services, with repayment deferred until the end of that particular statement period.

The key difference is that you are required to pay off the entire closing balance if you have a Charge Card – and therefore interest will not be charged on your purchases; however, a fee is incurred if the amount is not paid off in full. A Credit Card allows you to defer payment of the balance over time, with interest applied to the remaining balance.

Learn more about Charge Cards >

What are the benefits of having a low interest rate Card?

What are the benefits of having a low interest rate Card?

  • If you choose to carry a balance from month to month, a low interest rate card helps reduce your cost of borrowing.
  • With less interest charged, you can pay down your balance sooner.
  • Allows you to enjoy a low ongoing interest rate for any unpaid balance from balance transfers when the promotional interest rate expires.
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Useful terms

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Useful terms

  • Statement period: The dates for which your statements are issued and report transactions for. Generally, your statement period will be every 30 days, and actual dates can vary slightly from month to month.
  • Interest: Type of charge incurred as a result of borrowing money and not repaying in full within the indicated time. Interest is usually expressed as an annual percentage rate, also known as the interest rate.
  • Interest Free Days: Interest Free Days are the time from when you buy something using your Credit Card to when interest is applied to that purchase balance – usually at the beginning of your next statement period.
  • Closing balance: The amount you owe at the end of a particular statement period.

FAQs

Does American Express offer a no interest rate Credit Card?

Does American Express offer a no interest rate Credit Card?

No. However, if you’d like to avoid interest, you should consider alternative lending options such as Charge Cards (which may be subject to other fees and charges).

Learn more >

Can my Credit Card interest rate fluctuate?

Can my Credit Card interest rate fluctuate?

From time to time, we may review the interest rates set on any of our products. You will be notified well in advance if the interest rate of your Credit Card is changing.

What is the usual American Express® Credit Card interest rate?

What is the usual American Express® Credit Card interest rate?

Most of our Credit Cards have a 20.74% p.a. interest rate. However, the American Express Essential® Credit Card has an interest rate of 14.99% p.a.

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Why choose American Express?

Accepted at more places

With more Merchants in Australia choosing to accept American Express, including the big brand stores you spend at every day, your points will add up fast.

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Membership experiences

We believe our Card Members deserve more. Discover how we reward our Card Members.

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A great range of Cards

From Charge Cards to Credit Cards – you’re bound to find something to suit your needs.

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Terms and Conditions

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Terms and Conditions

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1. Refer to your Card Member Agreement for a full breakdown of how interest is calculated.