Repayment

There are three options for repaying the transactions charged to your credit card; repay the full outstanding balance each month, repay a partial amount of your choice or repay only the minimum amount required. Which option you choose affects the total amount you will repay, because the longer you take to clear the debt, the greater the total interest charged will be.

The monthly statement you receive will indicate the total amount that you owe on your credit card, which includes all purchases, balance transfers and cash advances made, plus any charges you may have incurred. Your credit card provider will give you a certain number of days within which you can repay this full balance. If you do not repay within the specified number of days, you will be charged interest on the outstanding balance. The interest you are charged varies between credit cards; it is decided by your credit card provider when you apply for the card, and is partially determined by your financial status. Certain credit cards carry interest rates as high as thirty percent per year. For more details see Interest Rates.

If you repay the full outstanding balance within the specified 'interest-free' period, you will not incur any further charges. However, you also have the option of spreading the cost of your transactions over a longer period of time. Although you will incur interest charges on transactions that are not repaid within the interest-free period, repaying over a longer period of time may help you to afford goods and services that you would not have been able to buy otherwise.