What Is Credit Card Interest Rate?

Do banks charge an interest on Credit Card purchases? The short answer is: Yes they do, but you can avoid paying the interest and enjoy your Credit Card free. We show you how.

A Credit Card comes with an interest-free period ranging from 20 to 50 days. This is how you can work out the interest-free period on your card.

Check for two dates on your card’s monthly statement – the statement date and the due date.

• The statement date is the day on which the bank generates a statement of your previous month’s expenses.
• The due date is the day on which you must pay the outstanding amount mentioned in the statement. The due date will usually be 20-25 days away from the statement date – a grace period to allow customers to pay the outstanding.

Assume, the statement date for your card is May 1. The May 1 statement will bill you for expenses between April 1 and 30, and the due date will be between May 20 and 25.

If you purchased something on April 2, you get to enjoy almost 50-55 days of interest-free credit. However, if you make a purchase on April 29, then you get only 21 to 26 days of free credit.

While you get a guaranteed credit-free period of 20-25 days, you can maximize the number of days by planning your purchases based on your statement cycles.

Read more about understanding Credit Card statement.

So, when do charges kick in? And what are the Credit Card interest rates?

If you clear your outstanding dues every month on or before the due date, you needn’t worry about paying interest. Interest payments become due only if you carry forward balances of the previous month.

For example, if your total dues are Rs 12,000, and you pay only a part of it on the due date, you will have to pay interest on the amount you carry forward, and any other expenses you make with your Credit Card till you settle the total outstanding.

HDFC Bank Credit Card interest rates range up to 3.4% per month. But the interest rate may be adjusted based on your relationship with the bank and the usage of the card.

If you have made large purchases and don’t want to settle your outstanding in full by the due date, you could opt for SmartEMIs on your Credit Card. This converts your outstanding into a EMI scheme, and you can repay it in pocket-friendly instalments. The interest rates on SmartEMIs are much lower.

Are you looking to apply for HDFC Bank Credit Card? Click here to know more!

Are Credit Card free? Click here to read more!

* Terms & conditions apply. Credit Card approvals are at sole discretion of HDFC Bank Ltd