When you use your credit card, you take a loan on the credit facility. You need to pay back this amount within the due date set by the card issuer. Exceeding your window of bill payment can result in interest on this loan.
What it's all about
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Credit cards give you the option to pay just the minimum amount instead of your entire bill amount. The unpaid amount is carried forward with an added daily interest charge till it's cleared. It's best to clear your bills in full to avoid this interest
Avoid the Minimum
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The average rate of interest on the outstanding balance can vary from around 2% to 4% per month. This essentially amounts to 24% to 48% per annum in India. Accurate figures depend on your card issuer and the type of card you have.
Credit card interest rate
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Interest charges =
(Outstanding amount x Interest rate p.a. X Number of days from the transaction date) ÷ 365
What's the interest rate formula?
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