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What is Credit Card Interest Rates?


Credit card interest rates, also known as finance charges, vary from one card issuer to another and may also vary across different credit cards from the same issuer. Before getting a credit card, you must be aware of the interest rate charged on it. Unlike other loans, credit card interest rates are usually not linked to the user’s credit score and repayment capacity. Every credit card has a preset finance charge and it will be the same for all the customers.

The most important point to note here is that interest is charged on credit cards only if you have not paid the outstanding amount in full or withdrawn cash from ATMs using the credit card. No interest is charged when you clear your credit card dues on time.

Credit Card Interest Rate per month Annual Percentage Rate (APR)
HSBC Visa Platinum Credit Card 3.3% 39.6%
HDFC Bank Regalia Credit Card 3.49% 41.88%
American Express Membership Rewards Credit Card 3.5% 42%
SBI Card PRIME 3.35% 40.2%
ICICI Bank Platinum Chip Credit Card 3.40% 40.8%
American Express Platinum Reserve Credit Card 3.5% 42%
HDFC Regalia First Credit Card 3.49% 41.88%
SBI Card Elite 3.35% 40.2%
Citi PremierMiles® Credit Card 3.40% 40.8%
Standard Chartered Manhattan Platinum Credit Card 3.49% 41.88%

*Please note that the interest-rates mentioned above are subject to change at the bank’s sole discretion.

How to Calculate Interest Rate?

Interest is charged on credit card on a daily basis as long as the outstanding balance stays in your account. This can make the calculation a bit complicated. To help you understand how your card issuer charges interest on your credit card, here is an illustration:

Here we assume that the person has Rs. 2,000 outstanding balance, the credit card statement date is 18th of every month and the interest rate is 2.5% per month.

Date Transaction Amount
10th July Jewellery Purchase 15,000
15th July Apparel Purchase 5,000
15th August Payment to Credit Card 2,000
16th August Groceries Purchase 1,000
17th August Payment to Credit Card 15,000

Since Rs. 2,000 still stands unpaid in this account, the entire outstanding balance will attract an interest charge.

Credit cards, usually, offer up to 50 days of interest-free period to the user. However, this does not mean that all transactions will enjoy the same interest-free period. It depends on the day you make such a transaction.

Credit Card Interest Fees Period

Let’s understand this with the help of an example.

Say the statement date for your credit card is the 20th of every month and the bill is due on the 10th of next month. So, if you make a transaction on the 10th of the previous month, then this transaction will enjoy the full 50-day interest-free period. However, if you make a purchase on the 10th of the current month, that is, 10 days before the statement date, this transaction will only get the 10-days worth of interest-free period. Similarly, a purchase made on the 19th will only get 1 day of the interest-free period.

The interest-free period is not applicable to:

  • Cash withdrawal
  • Every transaction, if you carry forward your balances to the next cycle