The Interest-Free Period

You will not immediately be charged interest on transactions made with your credit card, unless you use your card for cash advances and money transfers. Interest will be charged on these actions as soon as they are made, but most transactions such as purchases have an interest-free period; interest will only be calculated after a certain period of time has elapsed. This period of time enables you to pay off your balance when you receive a statement and avoid paying any interest charges. The period varies between different cards and card providers, but could be as much as fifty-six days. This means that you have up to fifty-six days in which to repay the debt without being charged interest. If you do not pay off the full outstanding balance, interest will be charged on the remainder.

If you have £600 outstanding on your credit card statement, and decide to pay just £100 at the end of the month, your outstanding balance will be £500. It is on this amount that the interest rate will be charged. Ensure that you read the terms and conditions of your credit card, since many providers will calculate any interest charged from the date you made the purchase, as opposed to the current that you did not pay off the full balance.

If you do not use your credit card for cash advances or money transfers and pay off the full balance each month, you need not worry about the card's interest rate because you will not be charged interest.