What are credit card interest rates?

When you borrow money on a credit card, you could be charged interest.

How interest is calculated

The amount of interest you could pay on any credit card borrowing is worked out as a percentage.

  • The higher that percentage, the more expensive it'll be to borrow.
  • The lower it is, the cheaper it'll be.

You might find the APR, or Annual Percentage Rate, useful when making quick comparisons between credit cards, but make sure you read through all details carefully to understand all borrowing costs, including credit card fees and charges.

For a quick run through, watch our short video.

 

Watch our video to understand what credit card interest rates are.

Different rates apply to different things

It’s useful to know that different rates of interest might apply to portions of your balance, depending on transaction type, and whether the standard or a promotional interest rate applies.

Card purchase rates

This is the rate of interest which applies when you pay for goods or services with a credit card. It’s also the interest rate that the APR is based on.

Balance transfer rates

When you move balances from one credit or store card to another, that’s a balance transfer. In addition to interest, a transfer fee might apply.

More on balance transfers

Money transfer rates

When you move funds from a credit card to your UK bank account, that’s a money transfer. In addition to interest, a transfer fee might apply.

More on money transfers

Cash transaction rates

Cash transactions include ATM withdrawals and purchasing foreign currency. As well as interest, cash advance and non-Sterling transactions fees could apply.

How to minimise interest charges

When offers apply

 

If there’s a 0% introductory or promotional interest rate on your account, as long as you make transactions within any specified dates, you won’t be charged interest for a set period of time -usually a number of months. It’s important to know that standard interest rates will apply to any remaining balances when a promotional rate expires.
 

To see the interest rates which apply to your account, check out your latest credit card statement.

When offers don’t apply


Even if there aren’t promotional interest rates available, if you pay your credit card statement balance in full and on time every month, you won’t be charged interest on card purchases. However, this might not be realistic for people using a credit card to spread the cost of larger purchases, or to consolidate a number of balances.

 

If you can’t pay your whole statement balance each month, it’s a good idea to pay as much as possible to keep any interest costs to a minimum.

Frequently asked interest questions
 

A summary on credit card interest rates

Interest is charged as a percentage on the money you borrow on a credit card.

 

  • Different rates of interest can apply to different transaction types.
  • Introductory or promotional interest rates could reduce the cost of borrowing.
  • As well as interest, other fees and charges may apply.
  • Check your latest statement to see the interest rates which apply to your account.

Halifax is a division of Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ. Bank of Scotland plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628.