Credit Card Interest Rates

Learn how credit card interest rates work so you can find a card that suits your needs.

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When you use a credit card, you’re essentially borrowing money from the account’s credit limit. So just like any other loan, interest may be charged on the balance. How and when this interest is charged can have a huge impact on what you’ll pay for the use of your credit card.

To make sure your credit card works for you, here you’ll find answers to the most common questions about interest, including the different rates that may apply and when it’s charged. We also look at how you can compare credit card interest rates and take advantage of interest-free days so you can avoid interest charges.

DBS Live Fresh Card

DBS Live Fresh Card

Get AirPods or S$200 cashback when you sign up by 30 June 2020.

Offer ends 30 June 2020

Eligibility criteria, terms and conditions, fees and charges apply

DBS Live Fresh Card

Apply today and enjoy up to 10% Cashback on online and contactless spend (including SimplyGo rides).

  • Principal Annual Fee: S$0 annual fee for 1 year - S$192.60 thereafter.
  • Cashback Rate: 10%
  • Annual Interest Rate: 26.8%
  • Minimum Income (Singaporean & PR): S$30,000
  • Minimum Income (Non-Singaporean): S$45,000
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What are credit card interest rates and how do they work?

Interest rates are a type of fee that’s charged when you borrow money. With credit cards, interest rates are calculated as a percentage of your balance and shown as an annual or per annum figure.

Most credit cards also have different interest rates for different types of transactions, with the most common being a purchase rate and a cash advance rate. You can learn more about different types of interest rates below.

How is credit card interest calculated?

The interest rate on credit cards is normally shown as an annual figure. But most credit card companies calculate interest on a daily basis and then add the charges to your account at the end of each statement period. To determine your credit card interest amount, your daily outstanding balance is multiplied by the daily interest rate on your credit card. These daily calculations are then added together at the end of the statement period to get the total interest due. The daily interest rate is calculated by dividing the EIR by 365 days.

Compound interest costs

The way credit card interest is charged is known as “compound interest” because it is calculated daily. This means that you could end up paying interest on your interest charges. The good news is that you can cut down on interest costs any time you make a repayment, because that will also affect the daily interest calculation.

Types of credit card interest rates

Here are the most common types of interest rates you’ll find on credit cards:

  • Purchase interest rate. The purchase EIR is the interest you are charged when you use your credit card for making payments in retail outlets or online.
  • Cash advance interest rate. The cash advance EIR is the interest rate you are charged when you use your credit card for withdrawing cash from ATMs or cash equivalent transactions, like buying gift cards or gambling.
  • Balance transfer interest rate. This is the interest rate you are charged when transferring an existing credit card debt to a new card.
  • Promotional interest rate. Many credit card companies offer new customers promotional interest rates for purchases and/or balance transfers. This promotional interest rate is only available for a limited time, with the standard interest rate applying after that. For example, a card may offer you 0% interest on balance transfers for the first 12 months. If you didn’t pay off the balance transfer during the first 12 months, the standard rate for balance transfers would apply to the debt.

Even the smallest difference in credit card interest rates can have a huge impact on your account costs. So when you’re looking for a new card, make sure you compare both the standard and promotional interest rates to help you find one that suits your needs.

Comparing credit card interest rates

To show you how important it is to compare interest rates, let’s say you have a balance of S$1,000 on a credit card with an interest rate of 20.99% p.a. If you only made monthly payments of S$50 on this debt, it would take you around 2 years and to pay off your balance and cost you about S$212 in interest.

On a credit card with an interest rate of 15.99% p.a., it would still take around 2 years to pay off your balance but would cost you S$153 in interest. That’s a saving of S$53 compared to the card with a higher rate, which is basically another monthly repayment. The bigger the difference in rates, the greater these potential savings would be.

What else do I need to know?

As well as interest rates, make sure you consider the following when you’re looking for a new credit card:

  • Interest-free days. Many credit cards offer up to a certain number of interest-free days on purchases when you pay your account balance in full by the due date on your statement. For example, up to 23 days interest-free. This gives you a way to avoid interest charges for spending on your credit card.
  • 0% interest rate offers. If you get a credit card with a promotional 0% interest rate, it may only apply for certain types of transactions. For example, you could get 0% interest on balance transfers for 12 months but still have to pay the standard variable interest rate for purchases. There is also a range of credit cards that offer introductory 0% interest rates on both purchases and balance transfers, although standard rates will apply at the end of the promotional period.
  • Annual fee. Most credit cards charge an annual fee, which could also add to your account balance. Remember to factor this cost in when your comparing credit cards and also when you’re budgeting for interest costs and repayments.
  • Other features. Many credit cards offer complimentary extras such as insurance or rewards, which could help offset the cost of the annual fee and interest charges. Just remember to weigh the value of the benefits against potential costs so you can decide if a card is worth it based on your spending habits and goals.

Compare credit cards

If you’re looking for a new credit card, use our table below to compare your options based on interest rates. Just click on the “Purchase rate” column and the table will update to show you cards with the lowest to highest rates.

Name Product Interest Rate Reward Annual Fee Min Income - Singaporean and PR
DBS Live Fresh Card
26.8%
Up to 10% Cashback on online and contactless spend (including SimplyGo rides)
S$0 annual fee for the first 1 year and S$192.60 thereafter
S$30,000
Get AirPods or S$200 cashback when you sign up by 30 June 2020.
UOB PRVI Miles American Express Card
25.9%
6 air miles for every S$1 spent through Expedia, Agoda and UOB Travel
S$0 annual fee for the first 1 year and S$256.80 thereafter
S$30,000
Apply today and enjoy free transfers to Changi Airport. Plus, 20,000 bonus air miles if you charge S$50,000 to your card in a year.
HSBC Revolution Credit Card
25.9%
Up to 5X Rewards points (2 miles per S$1 spent) on qualifying purchases
S$0 annual fee for the first 2 years and S$160.50 thereafter
S$30,000
New cardholders will be awarded with a Samsonite Prestige 69cm Spinner Exp with built-in scale (worth SS670) or S$150 cashback with minimum spend of S$800 within the qualifying spend period. Receive an additional S$20 worth of grab rides when you apply online with MyInfo via SingPass. T&Cs apply. Ends 30 June 2020.
HSBC Visa Platinum Credit Card
25.9%
Earn 1 Reward point for every $1 on all spend.
S$0 annual fee for the first 2 years and S$192.60 thereafter
S$30,000
New cardholders will be awarded with a Samsonite Prestige 69cm Spinner Exp with built-in scale (worth SS670) or S$150 cashback with minimum spend of S$800 within the qualifying spend period. Receive an additional S$20 worth of grab rides when you apply online with MyInfo via SingPass. T&Cs apply. Ends 30 June 2020.
KrisFlyer UOB Credit Card
25.9%
Earn 3 KrisFlyer miles per S$1 when you spend with Singapore Airlines, Scoot, SilkAir or KrisShop and 1.2 KrisFlyer miles per S$1 on all other spend.
S$0 annual fee for the first 1 year and S$192.60 thereafter
S$30,000
Apply today and enjoy up to 3,000 KrisFlyer miles if you charge at least S$1,500 to your credit card in the first month.
UOB Yolo Card
25.9%
Wide range of discounts. Plus, complimentary travel insurance
S$0 annual fee for the first 1 year and S$192.60 thereafter
S$30,000
Apply today and get up to S$230 in bonus cash credits. T&Cs apply.
Citi Rewards Credit Card
26.9%
10X Rewards on certain shopping spend, including online purchases
S$0 annual fee for the first 1 year and S$192.60 thereafter
S$30,000
Get 30,000 Citi Thank You points when you spend S$3,000 in the first 3 months. T&Cs apply. Ends 30 June 2020.
UOB Lady's Card
25.9%
10X UNI$ (or 20 miles) per S$5 spent on chosen category with no min. spend required
S$0 annual fee for the first 1 year and S$192.60 thereafter
S$30,000
Apply today and get S$150 in bonus cash credits and four medical consultations worth S$52. Ends 30 June 2020.
HSBC Advance Credit Card
25.9%
Enjoy annual fee waivers, up to 20.2% off your fuel, 1-for-1 lifestyle offers, and more
S$0 annual fee for the first 1 year (permanently waived for HSBC Advance banking customers) and S$192.60 thereafter
S$30,000
New cardholders will be awarded with a Samsonite Prestige 69cm Spinner Exp with built-in scale (worth SS670) or S$150 cashback with minimum spend of S$800 within the qualifying spend period. Receive an additional S$20 worth of grab rides when you apply online with MyInfo via SingPass. T&Cs apply. Ends 30 June 2020.
UOB One Card
25.9%
Up to 10% cashback on Grab and UOB Travel transactions; 6% for your Singapore Power bill; and 5% back on all other spending
S$0 annual fee for the first 1 year and S$192.60 thereafter
S$30,000
Apply today and get up to S$230 in bonus cash credits. T&Cs apply.
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When applying for a credit card, it’s important that you read the fine print to understand all the terms and conditions of your agreement. If you don’t take the time to understand the fees and charges associated with using your card, you could end up with a nasty financial surprise in the future. Do your research and read all paperwork thoroughly.
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