How credit card interest works

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How credit card interest works.

When it comes to credit cards, interest is a fee that’s charged for the use of money in the form of credit.

Credit card interest: What you really need to know.

Credit card interest, and how it’s calculated, can be pretty confusing. We hear this a lot. In fact, it's the topic our staff get asked about the most.

To help answer this question, we put together a short video that explains how interest is calculated and added some easy-to-remember tips about reducing the amount of interest a cardholder pays over time.

How to avoid paying interest.

You won’t have to pay interest on purchases that appear on your statement for the first time if you pay your credit card balance in full by the payment due date, which is 21 days from your last statement period. If you don’t, interest will be charged on the full amount owing starting from the original transaction date.

enviro™ Visa interest rates.

Regular interest rate Low interest rate
Annual interest rate 19.5% 11.25%
Daily interest rate 0.05342% 0.03082%
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Here's an example:

Let’s say your statement period is April 1–30. The end of your statement period is April 30 and the payment due date is May 21. This means:

  • If you pay your entire Visa account balance by May 21, we won’t charge interest on any of the purchases you made in April.
  • If you pay the minimum amount (or any amount less than the entire Visa account balance) by May 21, on May 22, we'll start charging you interest on the purchases you made in April.
  • The interest on your April purchases will be charged starting on the transaction date of each purchase. Interest will be calculated on the average daily balance at the daily rate (which varies depending on your card type). This means that any payment you make to your account will lessen your average daily balance and reduce the interest owed.
  • We will continue to charge interest every day on your April purchases until your entire Visa account balance has been paid in full.
  • The 21-day grace period from May 1 to May 21 in this example applies only to new purchases in April. If you have a balance outstanding from transactions on previous statements, we will continue to charge interest on those balances every day (including May 1–May 21) until you pay your entire Visa account balance in full.

Keep learning.

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