When is Interest Charged on Credit Cards?

As mentioned above, credit card interest rate is applicable only when you have outstanding amount in your account or when you have taken a cash advance. The following situations may lead to this:

• When you pay only the minimum amount due
• When you pay any amount lower than the total amount due
• When you make no payment at allWhen
• When you have withdrawn cash from an ATM using your credit card

“When you carry forward outstanding balances to the next billing cycle, the new purchases you make are not eligible for the interest-free period. This means that you will have to pay interest on new purchases from the first day onwards.”

Credit Card Interest-free Period

Credit cards, usually, offer up to 50 days of interest-free period to the user. However, this does not mean that all transactions will enjoy the same interest-free period. It depends on the day you make such a transaction.

Let’s understand this with the help of an example.

Say the statement date for your credit card is the 20th of everymonth and the bill is due on the 10thof next month. So, if you make a transaction on the 10th of the previous month, then this transaction will enjoy the full 50-day interest-free period. However, if you make a purchase on the 10th of the current month, that is, 10 days before the statement date, this transaction will only get the 10-days worth of interest-free period. Similarly, a purchase made on the 19th will only get 1 day of the interest-free period.

The interest-free period is not applicable to:

• Cash withdrawal
• Every transaction, if you carry forward your balances to the next cycle

Credit Card EMI Calculator

There are a number of factors that affect your credit card bill. It is very difficult to calculate this amount manually. To make it easier for the customers, a number of banks provide the Credit Card EMI Calculator tool on their website. You have to fill in the information in the boxes and it will show your bill amount for the month.