Credit Card Interest - how is it charged?

Understanding interest

How is credit card interest charged?

When we charge interest (and when we don’t)

As long as you pay your main balance plus any monthly Purchase Plan instalments in full by your payment due date: 

  • we won’t charge interest on purchases or transactions made in foreign currencies that you’ve made since your last statement
  • we’ll only charge interest on outstanding standard balance items (including purchases), purchases on promotional rates, and non-Sterling cash transactions included in your current statement balance up to the date of your current statement

We charge interest on all Sterling cash transactions and balance transfers on promotional rates from the date they’re added to your account to the date you pay them off. This will always apply, even if you pay your total outstanding balance in full by the payment due date.

If you have a promotional balance at 0% on your account and you only pay off the purchases you’ve made that month, we’ll still charge you interest on those purchases. To avoid these interest charges, you have to pay off your main balance plus any Purchase Plan instalments due for that month.

How we allocate payments

If a payment you make is less than your total outstanding balance as shown on your statement, we’ll use it as follows:

  • if you have any Purchase Plans on your account, to make any Purchase Plan instalments due for that month
  • to reduce your main balance (your statement balance less any Purchase Plan balance). We’ll start with the balances charged at the highest interest rate first and then reduce the lower-rate balances. If you have more than one promotional balance at the same interest rate, we’ll use your payment to reduce the balance with the promotional rate that ends first
  • if you have any Purchase Plans on your account, to reduce any remaining Purchase Plan balance. If you have more than one Purchase Plan, we’ll use your payment to reduce the Purchase Plan that ends first
  • if the standard balance includes default fees, we will pay those off before the rest of the standard balance