Credit Card Interest Rates

Credit Card Interest Rates will dictate exactly how much you need to pay on your credit card repayments. Comparing credit cards and monitoring interest rates is an important strategy to ensure you are on the best credit card offer for your financial situation.

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Credit card interest rates can differ tremendously. So much so that some consumers pay interest at around 10 per cent, while others pay in excess of 23 per cent. Each credit card is charged a rate - the interest - for allowing you to spend someone else's money to buy things. Since each card's interest rate varies, you need to read the provider's terms and conditions statement to fully understand how much you will need to pay.

How credit card interest is calculated:

Credit card interest rates are calculated at the end of each statement cycle. The bank will then charge you the rate to your account on the last day of each cycle - statement period. A ADB (average daily balance) will be calculated by your bank and then divided by the days in your statement cycle. The daily rate is then calculated by dividing the APR by 365.

Example: Daily Rate = APR x 365. For example 18.15% APR x 365= 0.04973% daily rate.

The bank then multiplies the ADB by the daily rate. Finally, this number is then multiplied by the number of days in the statement period.

The many faces of credit card interest rates:

Interest rates are charged according to four major categories. These are:

1. Cash interest rate: If you transfer funds between accounts via telephone and Internet banking, withdraw cash from an ATM or pay your bills over the counter you are up for this type of interest charge.
2. Interest rate on the interest: Outstanding accounts attract more costs as time goes by and you should be careful to avoid these under any circumstances.
3. Special interest: This interest is charged on things like a balance transfer between different credit card accounts and banks.
4. Interest on purchase: If you use your card to purchase goods and services you pay interest based on the amount you spend.

Interest-free cards:

Interest-free credit cards are offered to clients who are prepared to pay off their card in full each month. A commonly used schedule is a55-day interest-free period. You won't pay any interest at all, if you can pay the card in full on the due date of the credit card statement.

If you fail to pay off the card in due time then your next statement will show interest charges for the portion of the outstanding balance and all new transactions made since the date of the last statement.

You will be charged interest on any new transactions you make until you pay the card off in full.

For cards that are paid of in full a few days late there will be a late payment fee charge and a loss of the interest-free benefit for that particular cycle.

When exactly is the interest charged?

If you get an interest charge, it will be debited from you on the last day of your statement cycle. You can find out more about credit card interest rates by speaking with your lender.

To help you keep on top of the best Credit Card Interest Rates and managing your credit cards to make the most of the best interest rate offers available, we have written a number of guides and articles with tips to reduce your credit card balance and make the most of your credit card:

• Reserve Bank Cash Rate
  

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• How to know if you are paying too much credit card interest
  

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• Interest Rate Cut By RBA – What Does It Mean For You?
  

  An interest rate cut is a way for the Reserve Bank of Australia to help control the amount of money in the economy. By doing this they can cut inflation and boost economic conditions. There are a number of factors that affect interest rates and how they in turn affect consumers.



• Smart Tips to Cut Down Credit Card Interest
  

  Credit card debt can creep up on us very quickly if we don’t learn how to reduce interest payments on our credit card. Here are some simple tips on how to cut down your interest payments by optimising your spending patterns, debt consolidation and balance transfers.



• How To Manage Your Finances Through Interest Rate Increases
  

  Interest rates are on the rise. If you have significant debt outstanding this would mean additional repayment pressure. Learn how to properly manage your finances so as to reduce the impact of interest rate increases.



• Credit Card Health Check – Are You Paying too Much Credit Card Interest?
  

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• How to Know if You Are Paying Too Much Credit Card Interest
  

  Do you know if you’re paying too much credit card interest? Most people don’t even stop to think about how much they pay in interest charges every month, but there are many Australians who could be paying far less.



• Best Interest Rates
  

  Understand what constitutes the best interest rate in a credit card. Find out which cards are offering some of the most appealing rates, and why you should grab a great deal now.



• Credit Card Advertising Rules and Laws
  

  There are certain rules and regulations that credit card companies must abide by when they are advertising for their cards. Consumers are protected by the requirement of credit card companies to reveal certain information so consumers are able to make informed choices. Understanding the requirements will help consumers make even better choices according to their situation.



• Credit Card Interest Rates And How You Can Take Advantage Of Them
  

  Sometimes when a big purchase is on the horizon, a credit card can be the easiest way to pay for it. There are strategies to actually make these buys very cost effective. The easiest way is to seek out the best credit card interest rates.



• Interest Rate Comparison
  

  Learn why making an interest rate comparison is a key issue in your long-term financial planning. Understand the main types of interest rates offered to consumers so that you can make a more informed choice.



• Compare Interest Rates
  

  When it comes to comparing interest rate, there are four main types that you need to be aware of. If you can learn the art of credit card comparison, you will forever be able to find the best credit card deals available for you and your financial situation. Read our guide, which will teach you all you need to know to effectively compare interest rates and card offers.



• Credit Card Rates & Bank Fees – A Market Insight
  

  Every credit card has associated rates and surcharges. Read this guide to get an overview as well as learn about the Uniform Consumer Credit Code.



• How Interest Rate Changes Work
  

  If you have ever wondered how and why the RBA changes interest rates in the Australian economy then this article is worth your while. You will learn how & why the RBA changes interest rates and how banks directly change their interest rates as a result on home loans, term deposits, credit cards etc which in turn affects us.



• How To Minimise Interest Rate Hike Impact
  

  Unfortunately we have no direct control over interest rate fluctuations in the Australian economy. We do however have total control of how interest rate hikes can impact our financial budget by planning ahead. This article provides some strategies on how to dampen the impact that interest rate changes can have on us and our mortgages.



• Understanding Interest On Your Citibank Credit Card
  

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• Reserve Bank Interest Rates: Understanding Monetary Policy
  

  As majority of Australian citizens are affected by interest rate changes by the Reserve Bank Of Australia it is essential we understand exactly how interest rates are determined. This article will help you understand how the RBA goes about settings interest rates.



• Be Smart With Interest Rates
  

  This article covers the imminent rise of credit card interest rates and how it could affect your bottom line finances. If you care much for being credit card savvy you need to take a closer look.



• Interest-Free Period Credit Cards
  

  Wouldn’t we all want to own an interest-free period credit card? But sometimes it is better not to bother with these cards. Learn when they can get you more and when to avoid them.





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Editor's Choice: Our Top Credit Cards




Credit Card	Card Details	Interest Rate (p.a.)	Cash Advance Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Interest free days (up to)
HSBC Credit Card	Editor's Choice: 0% for 6 months Balance Transfer & No Annual Fee Featuring a $0 annual fee for life, and 0% p.a. balance transfer for 6 months, the HSBC Credit Card was voted the Best Transactor Credit Card for 2010.	16.99%	20.75%	0% for 6 months	$0	55
Suncorp Clear Options Standard Visa Card	A great 12 month balance transfer offer, combined with a low annual fee and a good interest rate on purchases.	12.24%	17.99%	1.9% for 12 months	$39	0