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Interest Rates can be confusing. If you’re not sure how these work, this handy guide will help you understand everything you need to know.
Credit Card interest rate also referred to as Monthly Percentage Rate, varies from one Card provider to another and may also vary across different Credit Cards from the same provider. It is an essential factor to consider before signing up for a Credit Card. Here is all the information about the Credit Card interest rate and how interest is charged on your Credit Card.
Credit Card services allow you to borrow money. This money is loaned to you at a fixed rate of interest, also called the Credit Card interest rate. For Credit Cards, interest is expressed as a monthly rate known as the Monthly Percentage Rate, or MPR. Interest is payable at the Monthly Percentage Rate on all Charges from the date the Cardmember incurs the transaction until they are fully repaid.
For more information on MPR, please refer our MITC
Interest is payable at the monthly percentage rate on all Charges from the date the Cardmember incurs the transaction until they are fully repaid, except where an interest free period applies. Interest, if payable, is calculated by multiplying:
In case the payment made towards the monthly statement of account for any particular month is less than the total interest and Applicable Taxes billed in that particular statement, the remaining interest amount will get added to subsequent month’s outstanding and such shortfall in interest will attract interest on interest.
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American Express Credit Cards have different interest charges and transaction fees. Your Credit Card arrangement specifies the charges that apply to your purchases, balance transfers and cash withdrawals.
When you pay a part of your outstanding balance the transactions with lower interest rates are paid off first.
If you fail to make a repayment or spend more than your agreed spending limit, you will be charged a penalty interest rate.
Find out more about American Express Credit card charges and fees
Charge Cards do not have interest rates as they do not extend credit to you. The full balance on a Charge Card is to be fully paid at the end of each month. This means you have no outstanding balance at the beginning of the next month.
If you pay your total due amount in full before the Payment Due Date, no Credit Card fee is applied to your account. However, you might have to pay the interest in the following scenarios:
The additional benefits and rewards you get from using a Credit Card also impact which type of Credit Card is the best for you.
If you use your Credit Card to pay for purchases and always make full monthly payments, you can focus on Membership Rewards Points or travel loyalty programs when deciding, which Card is for you. The Platinum Travel Credit Card is likely to be perfect.
If you are sometimes unable to make the full payment on your Credit Card or would like to have greater flexibility with payments, then you will want to look for the lowest MPR from a Card. Your credit score will affect the MPR you can receive when applying for a Credit Card.
Credit Card minimum repayment or Minimum Due amount is the minimum amount you need to pay to your Credit Card provider on or before the Payment Due Date to keep your account regular and avoid incurring any late payment fees as this might adversely impact your credit score. It is a small percentage of your total outstanding amount each month. If you pay only the Minimum Due amount by the Payment Due Date of your Card, you can only avoid the late fees. Interest will still be applied to the outstanding amount.
Has talk of interest, annual fees, rates and percentages left you feeling confused?
Our simple Credit and Charge Card guides are a great place to start.