Credit cards grant you a line of credit against certain charges and fees, finance charges being the foremost among them. Commonly known as credit card interest rates, these charges are imposed as a price of borrowing money from the lender.
Credit card interest rates are determined by the lender’s policy and thus, vary between lenders. Moreover, credit card interest rates also vary among the different cards issued by the same lender. However, unlike other credit lines, your credit card interest rate is not affected by your CIBIL score. In other words, these predefined standard rates apply to all cardholders regardless of their credit histories.
The credit card monthly interest rate is charged only under the following circumstances -
When you repay only the minimum amount due on the card
When you pay an amount that is lower than the outstanding due
When you do not make your credit card payment
When you use your credit card to withdraw cash from an ATM
When you purchase items on EMI
Under the circumstances highlighted above, credit card issuers charge interest daily on the due balance in your account. The following formula is used to calculate credit card interest:
Credit card interest = [(Total Number of Days From the Transaction Date x Outstanding Amount x Credit Card Interest Rate Per Month x 12 Months)] ÷ 365 Days |
Let’s take an example to understand how to calculate credit card interest rates under different circumstances.
Transaction Date |
July 1st 2022 |
Amount |
₹10,000 |
Statement Date |
July 6th 2022 |
Minimum Amount Due (5%) |
₹500 |
Due Date |
July 26th 2022 |
Monthly Interest |
3% |
1. Scenario 1: You pay the due bill in full on July 21st (before the due date).
The net interest payable is zero.
2. Scenario 2: You make a partial payment before the due date.
Let’s assume a partial payment of ₹5,000 is made on 21st July and no transactions happen before the next statement date, i.e, August 6th. Interest is charged on ₹10,000 for 21 days (from 1st July to 21st July) and on the remaining ₹5,000 balance for 15 days (from 22nd July to 6th August).
Interest charged on ₹10,000 for 21 days: [(21 x ₹10,000 x 3% x 12)] ÷ 365 days = ₹207.12.
Interest charged on the ₹5,000 balance for the next 15 days: [(15 x ₹5,000 x 3% x 12)] ÷ 365 days = ₹73.97.
Total interest payable: ₹207.12 + ₹73.97 = ₹281.09.
3. Scenario 3: You make a partial payment after the due date.
Let’s assume you pay ₹5,000 on 28th July and make no subsequent transactions on the card until the next statement date, i.e, 6th August. Interest is charged on the initial sum for 28 days (1st July to 28th July) and on the balance for 9 days (from 28th July to 6th August).
Interest charged on ₹10,000 for 28 days: [(28 x ₹10,000 x 3% x 12)] ÷ 365 days = ₹276.16.
Interest charged on the ₹5,000 balance for the next 9 days: [(9 x ₹5,000 x 3% x 12)] ÷ 365 days = ₹44.38.
Total interest payable: ₹276.16 + ₹44.38 = ₹320.54.
4. Scenario 4: You make partial payment after the due date and make fresh transactions
Let’s assume you make fresh transactions of ₹2,000 on 15th July. Then,
Interest charged on the outstanding balance for 15 days: [(15 x ₹10,000 x 3% x 12)] ÷ 365 days = ₹147.94.
Interest charged on new outstanding balance with a fresh transaction for 13 days: [(13 x ₹12,000 x 3% x 12)] ÷ 365 days = ₹153.86.
Interest charged on balance after partial payment for 9 days: [(9 x ₹7,000 x 3% x 12)] ÷ 365 days = ₹62.14.
Total interest payable: ₹147.94 + ₹153.86 + ₹62.14 = ₹363.94
Credit card interest rate, also known as a ‘finance charge’, is the rate that the card issuers charge on the borrowed amount and is depicted as an annual percentage rate or an APR. However, these interest rates apply to those cardholders whose outstanding amount has not been paid in full each month and vary across different credit cards.
Bank Name |
Monthly Interest Rate |
Annual Interest Rate |
State Bank of India |
Up to 3.50% |
Up to 42% |
Axis Bank |
1.50%-3.60% |
19.56%-52.86% |
RBL Bank |
3.99% |
47.88% |
DBS |
3.75%-4% |
45% for customers with an existing credit card history. 48% for customers without an existing credit card history. |
ICICI Bank |
On InterMiles ICICI Bank credit card / MakeMyTrip ICICI Bank credit card / ICICI Bank HPCL Super Saver credit card: 3.50% On Manchester United credit cards/ Emirates Skywards ICICI Bank Sapphiro credit card/ Emirates Skywards ICICI Bank Emeralde credit card/ Emirates Skywards ICICI Bank Rubyx credit card: 3.67%
On ICICI Bank Instant Platinum credit card / ICICI Bank Instant Gold credit card / Fixed Deposit Instant credit card: 2.49% On other credit cards: 3.40% |
On InterMiles ICICI Bank credit card / MakeMyTrip ICICI Bank credit card / ICICI Bank HPCL Super Saver credit card: 42% On Manchester United credit cards/ Emirates Skywards ICICI Bank Sapphiro credit card/ Emirates Skywards ICICI Bank Emeralde credit card/ Emirates Skywards ICICI Bank Rubyx credit card: 44% On ICICI Bank Instant Platinum credit card / ICICI Bank Instant Gold credit card / Fixed Deposit Instant credit card: 29.88% On other credit cards: 40.80% |
Several banks offer some of the lowest interest-rate credit cards in India. Check out the table below to get a better idea.
Credit Cards |
Credit Card Interest Rate |
Kotak Mahindra Best Price – Premium Card |
1.50% per month (18% per year) |
1.99% per month (23.88% per year) |
|
HDFC Infinia credit card - Metal Edition |
1.99% per month (23.88% per year) |
ICICI Bank Instant Platinum credit card |
2.49% per month (29.88% per year) |
Bank of Baroda Signature Visa credit card |
2.60% per month (31.2% per year) |
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Credit card loan interest will be levied if you fail to clear the outstanding dues in full. That is to say, if you pay the minimum amount due on your card, you will still have pending dues and hence will be charged the interest rate.
The credit card's annual interest rate depends on the card type and the issuing authority. Different banks have different credit card interest rates. You can compare credit card interest rates and select the one that works for you.
The rate of interest may change frequently depending on the issuing bank or financial institution.
Not all cards need to have an interest-free period as it depends on the issuing bank.
Interest Rates usually vary from 2.5%- 3.5% per month and it completely depends on the issuing bank as well as the type of credit card. It is always advisable to choose a card with a low-interest rate.
A credit card’s interest-free period is the time between the transaction date and the next payment due date. As the name suggests, no interest is levied on the due amount during this grace period. Depending on your lender, interest-free periods can range from 18-55 days.
Credit card interest-free periods are not valid on transactions like cash advances, balance transfers, etc. You can enjoy interest-free credit if you pay your outstanding dues in full before the due date. If you fail to do so, the interest-free period will be cancelled and you will have to pay add-on charges on the closing balance and all new purchases made with the card.
Credit cards allow you to convert purchase costs into manageable EMIs. A credit card EMI calculator is a digital tool that helps you calculate your monthly repayment burden for EMI purchases made using a credit card. This online tool calculates the EMI due on your credit card based on basic parameters like the transaction amount, tenure, and interest rate. Like all EMI calculators, this digital tool helps you plan your finances and budget them well ahead of time.