Important Facts About Credit Card Interest Rates

1. When the cardholder pays only the minimum amount due and does not settle the entire bill.
2. When the cardholder makes any payment that is lower the total amount due on the card.

• The first and foremost fact about credit card interest rates is that they can be completely avoided. If a credit card holder pays off the entire outstanding amount on or before the due date, no interest rate or finance charges shall be applicable.
• Therefore, it can be understood that interest on credit card shall be levied only in two cases-
• The due date is an important factor when it comes to late fees. The credit card bill must be repaid within the due date mentioned in your credit card account statement. If you are late in your payment, a penalty is charged on the credit.
• All banks apply interest rates as an annual percentage rate (APR), which is charged on the outstanding balance for a given year. Even though banks apply an APR on credit card balances, when interest is computed based on a Monthly Percentage Rate (MPR). You can calculate your grace period yourself. It starts from the date of making the purchase and lasts until the due date.
• Banks also offer a grace period for making purchases through the credit card. This period is an interest-free window, where the bill can be settled without being charged for interest. This is the phase between the day you make a purchase until the due date. If you pay back within that phase, no interest is levied.
• Most banks and financial institutions allow credit cardholders to convert their credit dues into instalments. Here, the equated monthly instalments (EMIs) offer lower interest rates. The EMI scheme helps an individual ease their financial burden.

In Conclusion To know about all the possible charges and fees levied on your credit card, you will need to check your account statement. The account statement can be found either in your email or you can access it via online banking or mobile banking. Alternatively, you can opt request for a hard copy of your statement.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.