# How Does Credit Card Interest and APR Work?

This page will help you better understand your Credit Card including your
APR and interest rate, as well as making statement payments and spreading the cost of purchases.

## Understanding how my Credit Card Interest and APR work

Using a credit card is the flexible way to make payments. But remember, you may have interest applied to your Account on a monthly basis if you pay less than the full amount on your monthly statement.

Find out how interest is calculated and when you’ll be charged here.

## Your Credit Card interest charges

Using a credit card is the flexible way to make payments. But remember, you may have interest applied to your Account on a monthly basis if you pay less than the full amount on your monthly statement. Find out how interest is calculated and when you’ll be charged here.

### How do you work out the interest I pay?

We work out your annual percentage rate of interest (APR) by adding your personal rate to the Bank of England Base Rate. We call this your ‘simple’ rate. This is the rate you’ll pay on all balances on your Card, except for cash withdrawals or any other cash transactions you make. As these have their own interest rates, that are also linked to the Bank of England Base Rate.

We convert your annual simple rate into a daily rate, by dividing it by the number of days in a year (365). We then apply the daily rate and add it to the amount you owe each day.

For example, if you owed £1,000 and had a ‘simple’ rate of 20%, the amount you would pay in interest for one year would be 20% of £1,000, which is £200.

This amount would then be divided by the number of days in a year: £200 ÷ 365, which is 55p.

The interest is added to your Account every day. So, the following day you would pay interest on a balance of £1,000.55. We call this ‘compound interest’. And it means you pay interest on the interest you’re charged, not just on the things you buy.

Day Amount Owned Yearly Interest (rate 20%) Daily Interest TOTAL
DAY 1 £1000.0 £200 £0.55 £1000.55
DAY 2 £1000.55 £200.11 £0.55 £1001.10
DAY 40 £1022.00 £204.40 £0.56 £1022.56

Always remember, if you pay off your balance in full each month, you won’t pay any interest. You’ll also avoid other fees, like paying interest for late payments, returned payments, or over limit fees that can be added to your balance.

Bank of England Base Rate tracking is effective as of your statement on or after 01 October 2019.

## Credit Card 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.

Closing Balance

The amount you owe at the end of
a particular statement period.

## Spreading the Cost of Purchases

Your Card is designed to help you plan ahead when making purchases of all sizes, safe in the knowledge that you can pay all or part of your balance later.

STAY UP-TO-DATE. TURN ON ALERTS.

Take control by setting up alerts to notify you about your
Account:

You’ve spent a certain amount in a month

You’re within a certain amount of your credit limit

A weekly balance update

You have a payment due

We’ve received your payment

You can register via the Amex App, on your Online Account here, or by speaking with one of our Customer Care Professionals by calling the number on the back of your Card.

## Managing your Account

There are a number of ways to manage your Account. Either on the move through the Amex App, via your Online Account, or by phoning our Customer Service team, who are available 24/7.

Online Account

Our Online Account service helps you to
manage your finances to best suit you. You
can see recent purchases you have made,
pending transactions before they’re
charged to your Card, view your
statements and download past statements,
set up a Direct Debit and alerts, and make
payments when you choose.

Amex App

With the same features as our Online
Account but in a concise mobile
version, the Amex App is a great way
to help you manage your finances
when you’re on the move.3

Customer Services

Should you have a question about
your Account and you’re unable to
find the answer online, we have a
dedicated Customer Services
Team, available 24/7 to assist you.
You can call the team on
0800 917 8047.

## Want to learn more about Credit Cards?

Credit Card fees and charges explained

We’ll help you to understand all the Credit Card fees

### Credit Card repayments

What are Credit Card repayments and how do they work at American Express?

### What is a Credit Card limit?

Understand what a Credit Card limit is, how to increase it and useful tips for staying in your limit