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Credit Card Interest Rates

Credit Card Interest 2021

Last Updated 17th Jun 2021

Bank Credit Card Interest Rate Annual Fee
HDFC Bank Jet Privilege HDFC Bank World Card 1.99% ₹ 2,500
SBI Unnati Credit Card 2.50% Nil
Standard Chartered Bank Super Value Titanium Card 3.49% ₹ 750
HSBC Bank MMT Platinum Card 3.30% ₹ 499
Citibank PremierMiles Card 2.50% ₹ 3,000
ICICI Bank Emeralde Credit Card 1.99% ₹ 12,000
Axis Bank Insta Easy Card 2.50% Nil
  • Credit card interest rate is charged on credit cards only if the due amount is not paid in full or cash is withdrawn from ATMs using the credit card.
  • Credit card issuers usually offer an interest-free period on credit cards for 50 days.
  • Interest on top credit cards are in the range of 1.99% to 3.60%.

What is Credit Card Interest Rates?

Credit card interest rates, known as Annual Percentage Rate (APR), differ from one card issuer to another and may vary across various credit cards from the same issuer. The interest is charged on credit cards only if you have not paid the due amount in full or withdrawn cash from ATMs using the credit card. Before taking a credit card, you must be aware of the interest rate charged on it. Unlike other loans, credit card interest rates usually are not linked to the user’s credit score and repayment capacity. Every credit card has a preset finance charge, and it will be equal for all the customers.

Here are the following cases where a credit card attracts interest charges:

Case 1: Non-payment of outstanding amount by the due date

If a cardholder entirely skips the credit card payment in a month, then the bank will levy interest on the total amount due as well as all the new transactions from the date of transaction till the time all the previous dues are paid in full.

Case 2: Payment of only Minimum Amount due

If a cardholder pays only the minimum amount due on the credit card, then interest will be levied on the outstanding amount and all the new transactions till the previous balance is paid in full.

Case 3: Payment of less than the minimum amount due

If a cardholder pays the amount less than the minimum amount due then the interest will be levied on the remaining amount and on all the new transactions till the previous balance is paid in full.

Case 4: Cash Withdrawal

Cash Withdrawn from the credit cards attracts charges. The withdrawn amount will attract charges from the date of withdrawal till the amount is paid back in full.

Case 5: In case of carrying forward of the outstanding amount

If the cardholder hasn’t paid the previous month’s outstanding in full, then the bank carries forward the amount in the next billing cycle. The interest rate will be charged on the outstanding as well as on all the new transactions, till the previous dues are cleared completely.

How are Credit Card Interest Rates Calculated?

The interest rate on credit cards is calculated as the Annual Percentage Rate or APR. APR is the interest rate for the year rather than a monthly rate. However, the interest on a credit card is charged on a daily basis till the time the outstanding amount stays in your account. The general formula to calculate the interest on a credit card is as follows:

(Number of days from the date of transaction * Outstanding amount * Interest charge per month * 12)/365

The Annual Percentage Rate (APR) or Monthly Percentage Rate (MPR) vary from one bank to another and across credit cards from the same issuer. Do check the APR of credit cards before applying for a credit card.

Lowest Interest Credit Card

Bank Credit Card Interest Rate (p.m.)
HDFC Bank Jet Privilege HDFC Bank World Card 1.99%
ICICI Bank Emeralde Credit Card 1.99%
HDFC Bank Diners Club Black Card 1.99%
HDFC Bank Jet Privilege Diners Card 1.99%
ICICI Bank Instant Platinum Card 2.49%
HSBC Bank Premier Master Card 2.49%
Citibank PremierMiles Card 2.50%
Citibank Citi Prestige Card 2.50%
Citibank Rewards Card 2.50%
Axis Bank Insta Easy Card 2.50%

What Is Credit Card Interest-free Period And How’s It Calculated?

Credit card issuers normally offer up to 50 days of the interest-free period on a credit card. Though, this does not mean that all transactions will have the same interest-free period. It only depends on the day you make a transaction. It is not applicable to cash withdrawal and every transaction if you carry your balance to the next cycle.

An interest-free period starts with the first day of the billing cycle, also known as the statement period. The interest-free period ends 15 to 25 days after the last day of the billing cycle. A credit card bill will have all details of the total due amount at the end of the interest-free period, the date on which the statement was generated, and the due date, which is when the interest-free period ends.

This billing cycle continues for a month from the day the bill for the credit card was generated.

FAQs

What is a good interest rate on a credit card?

A fair interest rate on a credit card is a low-interest rate. The lowest possible APR is zero per cent, which is only available for a specific amount of time, and typically advertised as a promotional offer for a credit card. These cards may be balance transfer credit cards used to consolidate debt and save money on interest.

Why is credit card interest so high?

Interest rates on credit card balances are high because the cardholders tend to default at a higher rate than loans. So issuers charge high-interest rates to compensate for the risk.

How does the interest rate on a credit card work?

Interest is compounded on the due balance daily. At the end of each day, the interest rate is calculated based on the amount that stands unpaid on the account at the end of the day. Though minimal, the charge is added to your next day’s balance when the interest will be calculated for the next day.

When is interest charged on a credit card?

Interest is charged on your credit card when you roll over a due amount to the next billing cycle. In this case, new purchases will also attract interest from the first day onwards.

Will interest be charged even if I pay the minimum amount due?

Yes, interest will be charged on the due balance even if you pay the minimum amount due. Unless you pay the total amount, you will be charged interest.

What is a good APR for a credit card?

A good APR for a credit card is one that is below the current average interest rate.


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*Terms and conditions apply. Credit at sole discretion of lender, which is subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and collected from public sources. Read More
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