What is the Credit Card Purchase Rate?

The Credit Card Purchase Rate is also known as purchase interest rate or credit card interest rate on purchases.

What is a Purchase Interest Rate?

When the credit card statement balance is not paid in full, over the due date, then you need to pay an interest for the outstanding balance. Credit Card Purchase Rate is the purchase interest rate used to calculate the interest you need to pay.

How to Calculate Credit Card Interest?

For example, if you owes $1,000 and overdue, on a Low Rate Credit Card at 10% purchase rate card, you’ll need to pay roughly $1,000 * 10% / 12 months = $8.33.

Don’t be fooled by the $8! With compound interest, it adds up quickly!

Do you know? Some credit cards with higher interest rate, incur less interest when overdue. Therefore it’s important to find out, HOW purchase interest is calculated.

What are the typical Purchase Rate in Australia?

Depending on the credit card you use, the purchase interest rate varies from 0% to 25%.

To attract customers, credit cards often offers promotional Balance Transfer offers with ZERO Purchase Rate for 6~25 months. Don’t be fooled! You might not need to pay interest now, but if you can’t pay the balance in full at the end of promotion period, the interest can eat you alive!

If you are using a Low Rate card, it typically charges 9~12% purchase rate. Personally, I hate Low Rate cards. They are EVIL! It eases the pain for people in debt, but it usually drags people further down in the debt trap.

Finally, if you have a Reward Credit Card, it typically charges 18~22% for purchase rate. If managed well, this could be very profitable, for people who pays off the balance in full, on time, every time.

Forget about the purchase interest rate!

If you’re like me, who couldn’t care less about interest because you pay your balance in full, on time and everytime, congratulations!

However If you’re shopping around credit card based on purchase rate, you should probably not get a credit card, at all! Chances are you are in debt, even long term debt. Credit card is NOT the solution for debt!

You should never, and I mean NEVER, pay a single cent in interest. Never Pay A Single Cent for interest!

If interested, click here to find out how to get out of debt, for free.

Are you paying interest on credit cards? What do you think about the interest payment? Share your thoughts down below.

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