Secret Credit Card Interest You May Be Paying

Interest Rates

You may be paying three different interest rates on your credit card and not even know it. Most credit card companies charge different card interest depending on certain things that are dependent on what you are using your credit card for. Here are the different things you could be getting charged different rates on.

Standard Purchases

Your credit card charges a specific rate on purchases that is different than the other interest rates you are charged on other uses. For people who pay off their card each month, they do not need to worry about card interest as they will not be charged this since their card is being paid in full. For those that do not pay their card off each month, they will be charged a fee that is calculated using their interest rate. This fee is calculated using your balance and the interest rate. Interest rates on credit cards vary, but for standard purchases the average is about 15%-20%. Some credit card companies charge much more than this, and some charge less. Some credit card companies offer special introductory rates that can last for a long time, although most are short term rates that expire after a certain time has passed.

Balance Transfers

Your credit card may offer an introductory rate on a balance transfer. Meaning, if you transfer a balance from one card to another, you are charged a special rate which is normally very low. The interest rates that come with a balance transfer are offered in two ways. The first is a long term rate which may be offered for the life of the card. With this card interest you will be charged the low rate for the entire time you have the balance, so the rate will not rise while you are paying off the balance so you can take as long as you like. The other option is a short term interest rate. These are much more common and only last for a set period of time, normally six months to one year.

Cash Advances

The last and final interest rate you may be charged is for cash advances. This rate is almost always higher than the balance transfer or purchase interest rate so take caution when making a decision to do a cash advance.
Before opening any credit card, look at all the fees and different interest rates you may possibly be charged. It is important to understand these fees before making any purchases or cash advances.