What is a credit card interest rate
Posted: Wed Feb 19, 2025 3:25 am
The interest rate on a credit card is a figure that not all credit card owners know. Even fewer bank clients understand the scheme by which interest is calculated and how the monthly payment is calculated. In this article, we tell you everything you need to know about the calculation of interest on credit cards.
When you can avoid paying for using a credit card
Any card has a period when you can use the limit for free. It is called a preferential, interest-free, grace period and is about 55 days. Its features:
the standard grace period often applies only to non-cash singapore mobile database transactions - payment for purchases and services. A commission is charged for transfers and cash withdrawals, and interest begins to accrue on these amounts immediately;
Although you can use the limit for free for 55 days, you must make minimum payments. If you miss such a payment, it automatically ends the grace period;
The grace period can be renewed as many times as desired. The main condition for renewal is full repayment of the debt.
What does credit card interest rate mean
Interest accrual begins when the grace period ends. This is possible in three cases:
the required 55 days have passed, but there is still a debt on the credit card;
you missed a mandatory payment on your card;
you made a transaction that is not included in the interest-free period, such as a transfer or cash withdrawal.
Depending on the terms of the agreement, transfers and cash withdrawals may completely terminate the grace period or be counted separately from the amount spent on purchases. For example, you withdrew 10,000 ₽ and spent 7,000 ₽ in a store. Interest accrual for 10,000 ₽ begins on the first day, and for the remaining 7,000 ₽ only after the grace period has expired.
Credit card rates are on average higher than cash loans. This is largely due to the grace period during which you can use the limit for free.
When you can avoid paying for using a credit card
Any card has a period when you can use the limit for free. It is called a preferential, interest-free, grace period and is about 55 days. Its features:
the standard grace period often applies only to non-cash singapore mobile database transactions - payment for purchases and services. A commission is charged for transfers and cash withdrawals, and interest begins to accrue on these amounts immediately;
Although you can use the limit for free for 55 days, you must make minimum payments. If you miss such a payment, it automatically ends the grace period;
The grace period can be renewed as many times as desired. The main condition for renewal is full repayment of the debt.
What does credit card interest rate mean
Interest accrual begins when the grace period ends. This is possible in three cases:
the required 55 days have passed, but there is still a debt on the credit card;
you missed a mandatory payment on your card;
you made a transaction that is not included in the interest-free period, such as a transfer or cash withdrawal.
Depending on the terms of the agreement, transfers and cash withdrawals may completely terminate the grace period or be counted separately from the amount spent on purchases. For example, you withdrew 10,000 ₽ and spent 7,000 ₽ in a store. Interest accrual for 10,000 ₽ begins on the first day, and for the remaining 7,000 ₽ only after the grace period has expired.
Credit card rates are on average higher than cash loans. This is largely due to the grace period during which you can use the limit for free.