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What influences how much I pay?

In addition to the interest rate and your balance, there are three factors that determine how much interest you will be charged:

  • The underlying calculation method including: the interest-free period; when the interest calculation starts and stops, and; whether residual interest is charged.
  • The transaction type, including how your payment is allocated to different types of transactions. Since December 2010, repayments are being allocated to the highest interest rate part of the balance first, through to the lowest rate.
  • How much you pay and when you pay it. The more you pay, and the earlier you make your payment, the less interest you will be charged.

Details of how your card company deals with each of these factors will be shown in the summary box, or you can contact them to find out.

The UK Cards Association has released the CardCosts website, which allows credit cardholders to:

  • Gain a better understanding of the cost of their current repayment choices;
  • Experiment with different levels of payments and desired periods to pay off a balance;
  • Learn from a range of informative messages which explain what can be complicated terms;
  • Link to other help and guidance, such as credit card statements and summary boxes; and
  • Quickly receive details of sources of free independent debt advice.

To visit the CardCosts website, click the link below:

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