Credit card interest rates are the charges charged by credit card issuers on the borrowed amount applicable only when cardholders fail to pay their outstanding bill in full each month.
Credit card bills are generated at the end of each billing cycle and the credit card user has to pay the outstanding amount before the payment due date and grace period combined.
If a cardholder fails to pay the outstanding amount in time, then interest is charged on the utilised credit limit for the billing cycle. The period of interest calculation is charged from the day of default up to the payment date.
Here’s an example to understand this better – If the credit card billing cycle ends on the 20th of every month and comes with a grace period of 14 days, the last day for bill payment is the 5th of the next month.
Assume that there are two transactions, on the 5th and 9th of a month. If bill payment is made on the 10th, the purchase made on 5th January will attract interest for five days in case of default. For transactions made on 9th January, interest calculation is only for one day.
How are credit card interest rates calculated
When it comes to credit card interest rates, the Annual Percentage Rate (APR) is used to calculate the interest charged over the entire year, rather than monthly. However, for monthly transactions, the monthly percentage rate (MPR) is applied to calculate the interest rate. These rates differ from bank to bank and card to card. It is crucial to know the APR of the credit card you're applying for. Having a clear understanding of how interest is charged on your credit card can help you manage your finances effectively. To give you a better idea, let's take a look at how card issuers calculate interest.
Bajaj Finserv provides low-interest rate credit cards at 3.99% per month (47.88% per annum).
Credit card interest rates are only applicable if the cardholder fails to pay the minimum amount due within the grace period. The minimum amount may also contain the interest component. Hence, paying the total amount due helps cardholders avoid paying any additional interest.
When is interest charged on credit cards
Most credit cards charge interest when you do not pay your outstanding dues in full every month. All credit cards offer a grace period of approx. 21 days to pay off your balance. The due date for paying the same is mentioned on your statement, which is when interest starts if you have not paid off the full balance. Let us assume, you only make a payment of Rs. 5,000 against your outstanding balance of Rs. 20,000 on or before the due date. In this case, your card issuer will levy interest on the remaining balance.
|Transaction Date||August 1st 2023|
|Statement Date||July 6th 2023|
|Minimum Amount Due (5%)||Rs. 500|
|Due Date||July 26th 2023|
Credit cards with no annual fee
The annual fee is a charge required to renew a credit card. Bajaj Finserv provides credit cards with no annual fee.
Apply for a Bajaj Finserv RBL Bank SuperCard today and get low-interest rates credit card offers.
Frequently asked questions
Credit card interest rate is the fee charged on the outstanding balance by the card issuer when you do not pay your credit card bills on or before the due date. This rate varies from one card to another and is also dependent on your credit history. The Bajaj Finserv RBL Bank co-brand credit card offers the lowest interest rate at 3.99% per month.
You can avoid paying the credit card EMI interest rate by clearing both the minimum amount due and the total amount due on or before the due date. Interest is charged on the outstanding amount every billing month. Therefore, you do not need to pay the credit card interest rate when you pay your balance in full and on time.
The credit card interest rate gets charged on the outstanding balance when you fail to repay the total amount due before the due date. It can be charged daily or monthly, depending on the card type. Some credit cards also account for the Annual Percentage Rate (APR), calculated yearly.
Credit card interest rates can be charged both monthly and annually, depending on the card issuer.
Premium credit cards in India have the highest interest rates. They come with a high joining and annual fee and offer exclusive perks and benefits. The credit card interest rates of these cards depend on the issuing banks.
Several credit cards fall in the lowest interest rate credit cards category. Bajaj Finserv RBL Bank SuperCard also has low-interest rates of 3.99% per month.
The interest-free period starts on the first day of the billing cycle, also known as the statement period, and ends 20 to 25 days after the last day of the billing cycle.
When you pay a minimum amount due, you will have to pay interest against your total outstanding balance.
Yes, 12% interest is high. Bajaj Finserv co-branded credit cards charge lower interest rates on credit cards.
Your credit card interest rate may change if your credit card account has a variable rate. The variable rate is tied to an index which could change periodically.
No, the credit card interest rate may vary from one bank to another.
No, not all credit cards have an interest-free period.
If you do not pay your Bajaj Finserv DBS Bank Credit Card bill before the due date, you are charged the following late payment fee:
- No charge for the amount due up to Rs. 100
- Rs. 99 for the total due amount greater than Rs. 100 and up to Rs. 500
- Rs. 499 for the total due amount greater than Rs. 500 and up to Rs. 5,000
- 10% of the total due amount greater than Rs. 5,000 (maximum Rs. 1,299)
You will be charged 2.50% of the cash amount (minimum Rs. 500) on withdrawing cash from an ATM.