What is Credit Card interest and APR?

Understanding Credit Card interest, and your Card's APR (annual percentage rate), will help you know exactly how much paying with your Card could cost. 


What is Credit Card interest?

When you use your Credit Card, you're borrowing money, and unless you pay your balance in full within the specified, statement period, you'll be charged interest on what you owe. 


What is APR?

APR is a way of measuring the yearly all-in cost of credit. It takes into account the interest rate, as well as any additional costs associated with a Card, like the annual fee. As an annualised percentage, APR allows you to easily compare credit products and their affordability.


Your purchase and cash interest rates will move up and down in line with the Bank of England Base Rate. Base Rate changes will not apply to any promotional interest rates. Read more on Base Rate and how it may affect your interest here. 


Rates may also vary based on your individual circumstances.


How does Credit Card interest work?

Most Credit Card holders can avoid accruing Credit Card interest by paying off their full balance each month. But if you pay anything less than the full balance, such as the minimum payment, you’ll incur interest on outstanding balances, as well as any previously charged interest.


Details of your purchases and the amount of interest you’ve been charged will be clearly displayed in your Credit Card statements.


Read more on Credit Card repayments.


How is Credit Card interest calculated?

The amount of interest you'll pay depends on: 

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


At American Express we calculate interest on any unpaid balance daily, and add the interest to your account every month when we produce your statement1.


Description Example
Your closing balance each day £1,500
Your daily interest rate* 20.74% / 365 days
= =
Your daily new interest charges £0.85

Daily interest charges are added up and presented on your monthly statement in one sum


*The daily interest rate is your annual interest rate divided by 365 days

When do you pay interest on a Credit Card?

If you pay off your entire Credit Card bill on, or before, the statement due date (within the interest-free period), you won't be charged interest. If you opt to pay off your balance over several months, interest will be charged on the amount outstanding. Interest will be applied up until the date you fully repay your balance. 


View and keep an eye on your balance and payment due date by logging into the American Express® App or your Online Account. Read more on how to avoid Credit Card fees here.


Discover our Credit Cards and Charge Cards to find the right one for you. 


Credit Card Terms

Charge & Credit 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

Where is American Express accepted


What is surcharging


Using your Card Abroad


What Credit Card fees am I expected to pay


What is Credit Limit


How to choose a type of Card


What is a Charge Card


How to pay off your Card


How to apply for a Credit Card


What is Credit Score

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