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What is Credit Card Interest?

What is Credit Card Interest?

We’ll help you decipher the jargon around Card interest so you really understand how it works when it applies to Credit Cards.

Credit Card Interest Explained

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 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?

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 statement.

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 56 Interest Free Days and assumes that the previous month's balance has been paid in full.


Charge Card or Credit Card

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 delayed until the end of that particular statement period.

The main difference is a Charge Card requires you to pay off your balance in full each month, which means you cannot roll over your balance into the next month. If you like the stability of a debit card but are interested in extra benefits and rewards a charge card might be right for you.

Learn more about Charge Cards

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.


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.


Credit and Charge Cards Explained

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.

How Credit Cards and Charge Cards work

Learn More

Where is American Express accepted

Learn More

What is surcharging

Learn More

Using your Card Abroad

Learn More

What Credit Card fees am I expected to pay

Learn More

What is Credit Limit

Learn More

How to choose a type of Card

Learn More

What is a Charge Card

Learn More

How to pay off your Card

Learn More

How to apply for a Credit Card

Learn More

What is Credit Score

Learn More

American Express Benefits


Your security and protection are our priority. Our technology has been designed to give you peace of mind when using your card

Learn More about Fraud Protection


Access to our customer service is available 24/7 by phone, text or email.

Learn More about Customer Service


Contactless is the quick, easy and secure way to make payments - Simply touch your American Express Card on the reader, wait for the beep and you're done. What's more, with Amex pay and Apple PayTM you can even pay with your phone.

Learn more about Contactless Payments

Explore Our Credit Cards

American Express Offers a range of Credit Cards with different rewards and benefits tailored to your lifestyle and interests.

5% cashback will be payable to you by us on all your purchases made in the first three months up to £125. Introductory offers are not available if you currently hold or have held any other Platinum Cashback American Express Cards in the past six months. Any cashback from introductory offers will be credited to your Account in your card anniversary month. Your Card anniversary month is the one month period each year following the date on which your Account was opened. Cashback is not earned on Balance Transfers, Cash Advances, American Express Travellers' Cheques, Foreign Exchange transactions, interest, any spending in excess of your credit limit, charges for returned payments, late payment or referral charges and American Express Credit Card finance charges. You will earn cashback at the rate of 0.5% cashback at warehouse retailers in the United Kingdom. You can find out which retailers we treat as warehouse retailers by checking the FAQ section of our website (

Terms and Conditions apply. Please see the Insurance Terms and Conditions for full details. Please read this to understand the limits and exclusions that may apply.