Understanding Card interest rate
When you use your Credit Card, you are borrowing money from a lender. It is important to remember that if you don’t pay off your balance in full every month you will be charged interest until full repayment has been received. This interest is applied to your closing balance at the end of every day, and then totalled up to form interest on your statement amount.
All types of Credit Card charge interest rates. The interest rate (Calculated as APR – Annual Percentage Rate) is determined by the type of Credit Card you hold. Conversely, Charge Cards do not have interest rates as a balance cannot be carried forward from month to month. There is no actual credit offered – so you don’t have to pay interest.
The amount of interest you will be charged depends upon:
- The interest rate of your Credit Card
- The amount you spend
- When you pay your Credit Card bill
- The type of spend whether purchases or a cash withdrawal