In today's world of cashless transactions, having a credit card has become a necessity. With a credit card, you can complete your purchases today and pay for it later. All major banks in India offer credit cards for the convenience of their customers. However, the interest rates on it vary significantly from one credit card company to another. Even cards issued by the same company, have different interest rates depending on the type of card.

Before you apply for a credit card, you need to check the interest rates. Generally, the interest offered for loans are decided on a case-by-case basis, depending on the borrower’s creditworthiness and repayment capabilities. On the other hand, credit card interest rates are uniform for all cardholders. The interest rates do not vary based on the credit score and repayment capacity of the lender. It's fixed. All individuals who hold a particular card from a specific card issuer are charged the same interest rate.

Let's first compare the interest rates of credit cards to understand the crucial difference between the interest rates of credit cards and other loans. You are charged interest on your credit card only when you have not settled the outstanding balance in full before the due date. Alternatively, you also incur interest on it, when you use the card to withdraw cash from an ATM. You are not charged any interest when you pay the card bills on time. On the other hand, you are by default charged interest on the amount borrowed when you take a loan.

Interest Rates of Top Credit Cards in India for 2020

Card Name Interest Rate per Month
American Express Membership Rewards Credit Card 3.50%
American Express Platinum Reserve Credit Card 3.50%
Citibank First Citizen Titanium Credit Card 3%
Citi PremierMiles Credit Card 3.40%
Citibank Rewards Credit Card 3.15%
HDFC Infinia Credit Card 1.99%
HDFC Regalia Credit Card 1.99%
HDFC Regalia First Credit Card 3.49%
HSBC Classic Credit Card 3.50%
HSBC Gold Credit Card 3.30%
HSBC Visa Platinum Credit Card 3.10%
ICICI Instant Gold Credit Card 2.49%
ICICI Instant Platinum Credit Card 2.49%
ICICI Platinum Chip Credit Card 3.40%
Kotak Velocity Platinum Credit Card 3.10%
SBI Advantage Gold & More Credit Card 1.99%
SBI Advantage Platinum Credit Card 1.99%
SBI Advantage Plus Credit Card 1.99%
SBI Card Elite 3.35%
SBI Card Prime 3.35%
Standard Chartered Manhattan Platinum Credit Card 3.49%
TATA Empower Credit Card 3.35%

 

*Note that the interest rates specified in this table are subject to change, as per the card issuer’s sole discretion. 

Now that you've seen the interest rates of the top credit cards in India let's turn our attention to how the interest rates are calculated.

FAQs on Credit Card Interest Rates

1.How are credit card interest rates calculated

Unlike loans, the interest rates for credit cards are calculated daily. Credit card interests are compound interests. This means, at the end of every day, the interest for that particular day is calculated. This interest amount is then added to the next day's balance. On the next day, interest is calculated for the outstanding balance, as well as the interest added to your account. This continues till you settle the balance in full.

You are charged the interest as long as you have an outstanding balance in your account, past the due date. When you carry forward any outstanding amounts to the next billing cycle, note that all purchases you make after the due date do not qualify for the interest-free period. You are charged interest for the outstanding balance and any new purchases you make on the card, from the first day of the next billing cycle. 

2.When is interest charged on my credit card? 

As mentioned at the beginning of this article, you are charged interest on your credit card, only when you have not paid the outstanding dues in full, after the due date. Here are a few situations where you are charged interest:

  • When you do not pay the total amount due by the due date

  • When you pay only the minimum amount due 

  • When you do not make any payments in a billing cycle (when you have outstanding)

  • When you withdraw cash from an ATM using your credit card

3.What is the typical interest rate charged on credit cards? 

Generally, most card issuers charge interests ranging from 2.5% to 3.5% per month. However, some cards are categorised as low-interest cards like the SBI Advantage Platinum credit card that charges lower interest. So, make sure to check the interest before applying for a credit card.

4.Will I be charged interest even if I pay the minimum amount due? 

Yes. You will be charged interest on the remaining unpaid balance. Hence, it's highly recommended that you pay your credit card bills in full and on time to avoid incurring interest charges.

5.When should I pay my credit card bill to avoid any interests? 

Pay your credit card bill in full on or before the due date every month to avoid incurring interest on it.

EndNote

Compare and Choose the Right Credit Card for You 

There's no doubt that credit cards are a must-have financial product in today's digital world. However, choosing a card that charges high-interest rates can lead you into a debt trap. So, make sure to compare the interest rates and pick the best card that offers the best deal for you. Above all, pay your credit card bills fully on time to avoid incurring expensive interest charges.