Types of Interest on a Credit Card

There are two main types of interest that you’ll be charged when using a credit card.

Purchase Rate

The purchase rate on a credit card is how much interest you’ll be charged on the purchases you make on your card. The purchase rate can vary enormously depending on the card you choose, from as low as 7% p.a. up to more than 20% p.a. Be sure to choose a card that suits your spending habits to avoid paying back too much in interest.

Cash Advance Rate

The cash advance rate applies to money withdrawn on the credit card at an ATM. This rate also applies to other purchases and expenditure on your card, so check the terms and conditions to check what’s covered by each rate. The cash advance rate is usually much higher than the purchase rate, so withdrawing cash from your credit card isn’t recommended recommended unless it’s an emergency.