If you’ve used your card for purchases, your debt begins to accrue interest. This is called an APR, or annual percentage rate, and it usually ranges between 11.99% and 28%. APR lets you know how much interest you’ll need to pay for borrowing money on a credit card. It takes into account regular interest, along with any other fees and charges. Therefore, APR can be a useful indicator of how competitive a credit card is.
How do interest charges work?
Each month, you’ll receive a credit card statement. Your statement will include key details such as:
- The transactions you’ve made,
- Your total outstanding balance, and
- Any interest you’ve built up.
If you pay your entire credit card balance in full each month, you can usually take advantage of up to 55 interest-free days in the next statement period. Basically, you won’t pay any interest on what you’ve borrowed.
However, if you don’t pay off the whole debt then you’ll be charged interest on what’s left. That’s why it’s always best to pay all of your balance each month. Keep in mind that, if you miss the minimum repayment – which is typically about 2-3% of your total balance – you’ll be charged late payment fees. You may want to try our credit card interest calculator to test how long it could take to pay off debt.