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Credit Card Interest, Minimum Payments and Representative APR in the UK

By PointsExplainedLast reviewed

Find your statement and due dates

Your statement shows the payment due date. Purchases made during one billing period are all due by that date if you want to avoid interest.

Automate a payment above the minimum

Card issuers must let you pay any amount you choose at or above the minimum by automated repayment. Set it as high as you can afford, ideally the full balance.

Pay down the most expensive balance

Payments are applied to the highest-rate balance first, so avoid adding high-rate cash transactions on a card you are already paying off.

Respond to a persistent debt letter

If your issuer writes about persistent debt, contact it. Ignoring the follow-up request can lead to your card being suspended or cancelled.

Where this comes from

Sources

The documents this guide relies on. If one has changed since we read it, the document is right and this guide is out of date.

  1. HSBC UK: What is a credit card interest-free period?

    Most cards give up to 56 days interest-free on purchases if paid in full; billing-cycle example; if not repaid in full, interest usually charged from the date transactions were added until repaid.

    hsbc.co.uk · Accessed
  2. NatWest: What are credit card interest rates?

    Grace period typically applies only to new purchases, not cash advances or balance transfers.

    natwest.com · Accessed
  3. FCA Handbook CONC 6.7: Post-contract business practices

    Payment allocation to highest rate first (6.7.4R); minimum repayment floor of interest, fees and charges plus 1% for agreements from 1 April 2011 (6.7.5R); automated repayment option (6.7.6R); no rate increase when at risk of financial difficulties except end of promotional rate (6.7.10R, 6.7.11G); 60 days to close account and repay at old rate (6.7.13R); valid reasons for increases (6.7.14R, 6.7.15G); risk-based increase notice (6.7.16R); persistent debt rules incl. 18 months, £200 threshold, 3-4 year reasonable period, suspension, forbearance (6.7.27R-6.7.38G).

    handbook.fca.org.uk · Accessed
  4. FCA Handbook Glossary: representative APR

    Definition: APR at or below which at least 51% of resulting agreements are expected to be made.

    handbook.fca.org.uk · Accessed
  5. FCA Handbook CONC 3.5: Financial promotions and representative examples

    Representative example requirement and contents: interest rate (fixed/variable), other charges, total amount of credit, representative APR (CONC 3.5.3R, 3.5.5R).

    handbook.fca.org.uk · Accessed
  6. Financial Ombudsman Service: Problems with goods and services (Section 75 and chargeback)

    Points consumers in financial difficulty to MoneyHelper (government-backed) and StepChange (free debt charity).

    financial-ombudsman.org.uk · Accessed
  7. Consumer Credit (Disclosure of Information) Regulations 2010, regulation 3 (legislation.gov.uk)

    Pre-contract credit information must state the rate(s) of interest charged and the APR for the agreement.

    legislation.gov.uk · Accessed
Questions

About this guide

What happens if I only pay the minimum?

The minimum must cover at least your interest, fees and charges plus 1% of the balance, so the debt falls slowly. After 18 months of paying more in interest and charges than in principal, the persistent debt rules require your issuer to contact you.

Can my card issuer put my interest rate up?

Only for a valid reason, and you must be given notice. You then have 60 days to close the account and pay off the balance at the old rate over a reasonable period.

Is the representative APR the rate I will get?

Not necessarily. At least 51% of agreements are expected to be at or below it, so you may be offered a higher rate. Check your pre-contract information.
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UK Credit Card Fees Explained and How to Avoid Them

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