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.

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:

• Understanding Interest On Your Citibank Credit Card
  

  Majority of credit card owners don’t know what their APR is surprisingly. Being able to calculate your interest repayments is important so we show you how using the Citibank credit card as an example.



• 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.



• Why is Credit Card Interest Rising when Rates are Dropping?
  

  Over the span of a year, the Reserve Bank has cut interest rates by 4.00% or 400 basis points.

  
  

  Yet why have Australian banks and credit card providers failed to match the rate slashes?

  
  

  Find out what their excuses are, along with financial analyst commentary from Choice and Cannex on the matter.



• How to Find the Cheapest Interest Rate Credit Card?
  

  Finding the lowest rate credit card doesn’t necessarily mean it’s the cheapest. What’s more important is value, which is determined by weighing up the other factors of the card.

  
  

  Find out what features one must compare in order to get the most valuable low APR credit card.



• Isn’t it time you Fixed your Interest rate?
  

  After the lengthy process of comparing loans, mortgages and in rarer instances credit cards, the next consideration is whether or not to go with a fixed or variable rate.
  -
  Click here for a contemporary analysis of why now and the next following months are the best times to pounce on a fixed rate.



• Interest Rate Repayment Explanation
  

  The most common financial term you will hear from day to day would very likely be Interest rates. The term is no different for credit cards. The key feature by which people tend to judge cards by is their interest rates. This article will explain what exactly an interest rate is on a credit card, along with how to ultimately reduce your interest repayments.

  Financial providers and banks make the majority of their money from credit cards via interest rate repayments. If you’re late on your payments, generally they will penalize you with an inflated rate.

  Two different rates are often available on a credit card, a purchase rate and a cash advance rate



• New to Credit Cards? A Guide to Interest Rates
  

  There are more then a few low interest rate credit card offers available. You should find the one that saves you the most money through careful research of these options. They can be found by searching the web and paying close attention to the rates and whether or not they are introductory, adjustable, or fixed.



• What does 55 days interest free really mean?
  

  Does it really mean you get 55 days interest free for every purchase you make? Not really. This article discusses the true meaning of “55 days interest free” and runs you through a simple example.






Best Balance Transfer Credit Card Offer

The Bankwest Lite MasterCard is Australia's cheapest credit card offer, giving you the lowest MasterCard purchase rate of just 9.99% p.a. as well as a long balance transfer offer on your existing credit card balance at 1.99% p.a. for 12 months!






Click here to access the Bankwest Lite MasterCard terms & conditions.

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)
Bankwest Lite MasterCard	Editor's Choice: Cheapest Credit Card The lowest stress mastercard, with Australia's lowest MasterCard purchase rate of just 9.99% p.a.	9.99%	20.99%	1.99% for 12 months	$59	55
St George Vertigo	Editor's Choice: Best Bank Low 2.99% for 6 months (reverts to 11.99%) p.a. interest rate and balance transfer rate, from one of Australia's most respected banks.	2.99% for 6 months (reverts to 11.99%)	20.74%	2.99% for 6 months	$55	55
Coles Group Source MasterCard	The Coles Group Source MasterCard has no annual fee, a 0% p.a. balance transfer offer for 6 months, with a rewards program including savings on fuel and FlyBuys Points	19.74%	21.99%	0% for 6 months	$0	62
Citi Clear Platinum Visa	Editor's Choice: Low Interest An excellent low interest credit card offer with 11.49%interest on purchases and 0.99% for 6 months on balance transfers .	11.49%	20.99%	0.99% for 6 months	$49 (First Year, Save $50)	55
Bankwest Zero Platinum MasterCard	Editor's Choice: No Annual Fee Excellent introductory offer with a $0 annual fee for the life of the credit card and a 1.99% p.a. for 12 months on balance transfers	15.99%	15.99%	1.99% for 12 months	$0	55