Credit Card Interest Rates

Learn how credit card interest rates work so you can find a card that suits your needs.

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Couple paying for groceries with credit card.

When you use a credit card, you're essentially borrowing money from the account's credit limit. So just like any other loan, interest may be charged on the balance. How and when this interest is charged can have a huge impact on what you'll pay for the use of your credit card.

To make sure your credit card works for you, here you'll find answers to the most common questions about interest, including the different rates that may apply and when it's charged. We also look at how you can compare credit card interest rates and take advantage of interest-free days so you can avoid interest charges.

What are credit card interest rates and how do they work?

Interest rates are a type of fee that's charged when you borrow money. With credit cards, interest rates are calculated as a percentage of your balance and shown as an annual or per annum figure. For example, a card could have an interest rate of 9.99% p.a. (per annum) or 21.99% p.a.

Most credit cards also have different interest rates for different types of transactions, with the most common being a purchase rate and a cash advance rate. You can learn more about different types of interest rates below.

How is credit card interest calculated?

The interest rate on credit cards is normally shown as an annual figure. But most credit card companies calculate interest on a daily basis and then add the charges to your account at the end of each statement period. To determine your credit card interest amount, your daily outstanding balance is multiplied by the daily interest rate on your credit card. These daily calculations are then added together at the end of the statement period to get the total interest due. The daily interest rate is calculated by dividing the APR by 365 days.

Compound interest costs

The way credit card interest is charged is known as "compound interest" because it is calculated daily. This means that you could end up paying interest on your interest charges. The good news is that you can cut down on interest costs any time you make a repayment, because that will also affect the daily interest calculation.

Credit card repayment and interest calculator

*Whilst every effort has been made to ensure the accuracy of this calculator, the results should only be used as an indication. They are neither a recommendation nor an eligibility test for any product and should not be construed as financial advice, investment advice or any other sort of advice.

Types of credit card interest rates

Here are the most common types of interest rates you'll find on credit cards:

  • Purchase interest rate. This is the interest you are charged when you use your credit card for making payments in retail outlets or online.
  • Cash advance interest rate. You'll be charged the cash advance rate when you use your credit card for withdrawing cash from ATMs or cash equivalent transactions, like buying gift cards or gambling.
  • Balance transfer interest rate. The balance transfer interest rate is charged when transferring an existing credit card debt to a new card.
  • Promotional interest rate. Many credit card companies offer new customers a promotional interest rate for purchases and/or balance transfers. This promotional interest rate is only available for a limited time, with the standard interest rate applying after that. For example, a card may offer you 0% interest on balance transfers for the first 12 months. If you didn't pay off the balance transfer during the first 12 months, the standard rate for balance transfers would apply to the debt.

Even the smallest difference in credit card interest rates can have a huge impact on your account costs. So when you're looking for a new card, make sure you compare both the standard and promotional interest rates to help you find one that suits your needs.

How to compare credit card interest rates

To show you how important it is to compare interest rates, let’s say you have a balance of $1,000 on a credit card with an interest rate of 20.99% p.a. If you only made monthly payments of $50 on this debt, it would take you around 2 years and to pay off your balance and cost you about $212 in interest.

On a credit card with an interest rate of 15.99% p.a., it would still take around 2 years to pay off your balance but would cost you $153 in interest. That’s a saving of $53 compared to the card with a higher rate, which is basically another monthly repayment. The bigger the difference in rates, the greater these potential savings would be.

What else do I need to know?

As well as interest rates, make sure you consider the following when you're looking for a new credit card:

  • Interest-free days. Many credit cards offer up to a certain number of interest-free days on purchases when you pay your account balance in full by the due date on your statement. For example, up to 55 days interest-free. This gives you a way to avoid interest charges for spending on your credit card.
  • Annual fee. Most credit cards charge an annual fee, which could also add to your account balance. Remember to factor this cost in when your comparing credit cards and also when you're budgeting for interest costs and repayments.
  • Other features. Many credit cards offer complimentary extras such as insurance or rewards, which could help offset the cost of the annual fee and interest charges. Just remember to weigh the value of the benefits against potential costs so you can decide if a card is worth it based on your spending habits and goals.

Compare credit cards

If you're looking for a new credit card, you can use our tables to compare your options based on interest rates. Just click on the "Purchase rate" or "Balance transfer rate" column and the table will update to show you cards with the lowest to highest rates.

Updated January 20th, 2020
Name Product Purchase rate (p.a.) Interest Free Period Annual fee Balance transfer rate Balance transfer rate
St.George Vertigo Classic
13.99% p.a.
Up to 55 days on purchases
$55 p.a.
0% p.a. for 18 months
0% p.a. for 18 months
Get 0% p.a. interest for up to 18 months on balance transfers with no balance transfer fee. Plus, a low annual fee and purchase rate.
Coles Low Rate Mastercard
0% for 12 months, reverts to 12.99% p.a.
Up to 55 days on purchases
$58 p.a.
0% p.a. for 12 months
0% p.a. for 12 months
Collect 1 flybuys point per $2 spent at Coles supermarkets and get free delivery on orders over $100. Plus, Coles Mobile Wallet.
St.George Vertigo Platinum
0% for 15 months, reverts to 12.99% p.a.
Up to 55 days on purchases
$49 p.a. annual fee for the first year ($99 p.a. thereafter)
Features an introductory 0% p.a. purchase rate, $49 first year annual fee and complimentary travel insurance covers.
Bankwest Breeze Classic Mastercard
12.99% p.a.
Up to 55 days on purchases
$39 p.a. annual fee for the first year ($79 p.a. thereafter)
0% p.a. for 26 months with 2% balance transfer fee
0% p.a. for 26 months with 2% balance transfer fee
0% interest on balance transfers for the first 26 months, with a 2% balance transfer fee. Plus, a discounted first year annual fee.
NAB Low Rate Platinum Card
0% for 15 months, reverts to 13.99% p.a.
Up to 55 days on purchases
$100 p.a.
0% p.a. for 6 months with 2% balance transfer fee
0% p.a. for 6 months with 2% balance transfer fee
A platinum card that offers 0% p.a. for 15 months on purchases. Plus 0% p.a. on balance transfers for 6 months.
Bendigo Bank Low Rate Mastercard
11.99% p.a.
Up to 55 days on purchases
$45 p.a.
0% p.a. for 18 months with 2% balance transfer fee
0% p.a. for 18 months with 2% balance transfer fee
A no-frills credit card with a competitive annual fee and 0% p.a. interest rate on balance transfers for the first 18 months.
Australian Military Bank Low Rate Visa Credit Card
11.99% p.a.
Up to 45 days on purchases
$49 p.a.
0% p.a. for 12 months
0% p.a. for 12 months
Enjoy a 0% p.a. for 12 month balance transfer offer with no BT fee, up to 45 days interest-free on purchases, add an additional cardholder for $0.
St.George Vertigo Card - Exclusive Offer
0% for 14 months, reverts to 13.99% p.a.
Up to 55 days on purchases
$0 p.a. annual fee for the first year ($55 p.a. thereafter)
0% p.a. for 6 months
0% p.a. for 6 months
Finder Exclusive:
Low rate card offering 0% p.a. interest on purchases for the first 14 months and on balance transfers for 6 months. Plus, a $0 first year annual fee.
Virgin Money Low Rate Credit Card
11.99% p.a.
Up to 55 days on purchases
$49 p.a.
0% p.a. for 14 months
0% p.a. for 14 months
Get a $49 annual fee, 10% cashback on purchases made in the first 3 months (capped at $100) and a 14-month balance transfer.
Bank of Melbourne Vertigo Classic
13.99% p.a.
Up to 55 days on purchases
$55 p.a.
0% p.a. for 18 months
0% p.a. for 18 months
Enjoy 0% p.a. interest for up to 18 months on balance transfers. Plus, a low annual fee and competitive purchase rate.
BankSA Vertigo
13.99% p.a.
Up to 55 days on purchases
$55 p.a.
0% p.a. for 18 months
0% p.a. for 18 months
A no-frills Visa with the protection of a zero liability policy and a 24/7 fraud monitoring service.
Bank of Melbourne Vertigo Platinum
0% for 15 months, reverts to 12.99% p.a.
Up to 55 days on purchases
$49 p.a. annual fee for the first year ($99 p.a. thereafter)
Get a range of complimentary insurance covers, access to a 24/7 concierge and the convenience of Visa payWave contactless technology.
Bankwest Breeze Platinum Mastercard
12.99% p.a.
Up to 55 days on purchases
$49 p.a. annual fee for the first year ($99 p.a. thereafter)
0% p.a. for 26 months with 2% balance transfer fee
0% p.a. for 26 months with 2% balance transfer fee
Get 0% interest on balance transfers for 26 months (with a 2% fee), complimentary travel insurance and no foreign transaction fees.
Westpac Low Rate Card
2019 Winner
Westpac Low Rate Card
13.74% p.a.
Up to 55 days on purchases
$59 p.a.
0% p.a. for 16 months
0% p.a. for 16 months
A no frills, low rate card offering 0% p.a. interest on balance transfers for the first 16 months, with no balance transfer fee.
BankSA Vertigo Platinum
0% for 15 months, reverts to 12.99% p.a.
Up to 55 days on purchases
$49 p.a. annual fee for the first year ($99 p.a. thereafter)
Offers an interest-free purchase promotion, a discounted annual fee of $49 for the first year and complimentary travel insurance.
Coles No Annual Fee Mastercard
0% for 12 months, reverts to 19.99% p.a.
Up to 55 days on purchases
$0 p.a.
0% p.a. for 12 months
0% p.a. for 12 months
Offers 0% p.a. on purchases and balance transfers for the first 12 months and an ongoing $0 annual fee. Plus, earn flybuys for your eligible spend.

Compare up to 4 providers

When applying for a credit card, it’s important that you read the fine print to understand all the terms and conditions of your agreement. If you don’t take the time to understand the fees and charges associated with using your card, you could end up with a nasty financial surprise in the future. Do your research and read all paperwork thoroughly.

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2 Responses

  1. Default Gravatar
    KaruMay 26, 2013

    I have a Diamond MasterCard. My balance is $2700. I have paid $2500 on due date but charged $160. Is it correct? Why has this happened?

    • Avatarfinder Customer Care
      JacobMay 26, 2013Staff

      Hi Karu. It’s difficult to speculate why you’ve been charged this fee. Best to consult your credit card statement when it next arrives, or you can check your online banking facility to see why you’ve been charged this fee. If you let us know the name of the fee, we can offer some insight into why it has been charged, how to avoid it in the future, and maybe how to dispute it with the lender. Jacob.

Credit Cards Comparison

Updated January 20th, 2020
Name Product Purchase rate (p.a.) Balance transfer rate Annual fee
HSBC Platinum Credit Card - Balance Transfer Offer
19.99% p.a.
0% p.a. for 22 months
$129 p.a.
Enjoy a balance transfer offer, yearly annual fee refund, airport lounge passes and complimentary insurance covers.
ANZ Frequent Flyer Black
20.24% p.a.
20.24% p.a.
$425 p.a.
Earn 120,000 bonus Qantas Points & $275 back when you spend $4,000 in the first 3 months. Plus, airport lounge passes.
St.George Vertigo Classic
13.99% p.a.
0% p.a. for 18 months
$55 p.a.
Get 0% p.a. interest for up to 18 months on balance transfers with no balance transfer fee. Plus, a low annual fee and purchase rate.
Coles No Annual Fee Mastercard
0% for 12 months, reverts to 19.99% p.a.
0% p.a. for 12 months
$0 p.a.
Offers 0% p.a. on purchases and balance transfers for the first 12 months and an ongoing $0 annual fee. Plus, earn flybuys for your eligible spend.

Compare up to 4 providers

* The credit card offers compared on this page are chosen from a range of credit cards finder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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