If you own or are planning to own a credit card you should take the time to understand credit card interest rates. They are not as simple as one might think as rates differ according to your transaction type. To avoid spending a lot of money in interest you might look into a low rate card which can save you lots of money.
Citibank Clear Platinum
Enjoy an amazing low interest rate on the Citibank Clear Platinum. Try it out for yourself today!
- $99 annual fee
- 11.99% p.a. on purchases
- 0% p.a. for 12 months with 3% handling fee on balance transfers
- Cash Advance Rate of 21.74% p.a.
- 55 days interest free
- Minimum Income Requirement of $35,000 p.a.
Credit card interest rates can be a little bit tricky. As a credit card owner you might not think about the fact that every time you spend on your card you are, in essence, borrowing money from the credit card company. When you ‘borrow’ that money they charge a fee, in the form of interest for your loan. These rates are charged on a per annum basis, which means that you will pay that amount in interest over the course of a year. For instance, if you have a 15% per annum interest rate your debt will earn 15% of its value each year. That being said, interest is added daily not yearly, so that the longer you take to pay back your debt the more it will cost.
Four kinds of credit card interest rates
- Purchase interest: This is the interest that is charged when you buy things with your credit card. No matter what you purchase, clothes, airline tickets, or petrol you will be charged a purchase interest rate. Purchases often have an interest free period, however it will only be applied to your account if you have paid off your full balance the previous month. If you can do that you are basically borrowing money for free.
- Cash Advance interest: If you withdraw money from your credit card, in the form of ATM withdrawals, transferring funds, or select other transactions like gambling you are subject to this interest rate. It tends to be a significantly high rate that begins to accrue as soon as the transaction is processed.
- Special interest: These credit card interest rates are charged for specialised transactions like balance transfers. If you are planning to do something that could neither be termed a purchase or a cash advance you should pay close attention to these rates.
- Interest on interest: Interest on interest is the amount that is charged on the outstanding balance you carry which includes the interest noted above. It is here that the money you have borrowed can really add up.
One of the ways to save money on credit card interest rates is to procure a low interest credit card. These cards allow you to pay significantly less on purchases, saving you loads of cash in the long run. A low interest rate combined with smart spending and diligent bill payment can be very beneficial to your bank account. Be sure to pay close attention to all the terms and conditions of any credit card so that you get the best deal for your lifestyle and your wallet.
