How interest is calculated

Interest is a cost to a borrower for borrowing money. An interest rate is a way of expressing this for a set time-period, usually a year and is always expressed as a percentage of the amount borrowed.

If you buy something with a credit card, you are borrowing money from your card company to pay for it. If you don’t repay the amount you owe, in full, by the payment due date, your card company will charge you interest. Do not confuse the interest rate with the annual percentage rate (APR).

If you don’t pay the amount owing on your credit card in full, by the payment due date, your card company will charge you interest according to the type of transactions you have made.

To find out how your interest is worked out click here.