The credit card interest calculator

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Frequenty Asked Questions (FAQs)

How do Credit Cards work?
Credit cards give you credit, which is usually interest free for up to a maximum of 56 days, after which you can either pay off what you have spent on your credit card in full - meaning you pay no interest - or you can pay off a portion of your credit card balance each month.b Typically, the minimum amount you must repay is around 2.5% of your credit card balance, plus interest.

What is an Annual Fee?
It is yearly fee that credit card providers charge customers to use their credit card. You will be charged the fee regardless of your credit limit or how you use your credit card.

What is an APR?
'APR' - stands for Annual Percentage Rate and provides an indication of how expensive a card is. It tells you the rate at which you will be charged interest (the higher the rate, the more interest you will be charged).

What is a 0% Balance Transfer Card?
A credit card that lets you transfer the money you owe from other credit or store cards to a new credit card. You should remeber that a balance transfer credit card will charge you a 'Transfer Fee' and you would need to pay at least the minimum payment at the end of every month. When you apply for a new card, your application will be considered based on your credit history.

What is a Balance Transfer?
It is when you transfer a balance from one or more credit/store cards to another card. This allows you to repay the debt on those cards onto the new card, hopefully at a much better rate (lower interest charge).

What is a Balance Transfer Fee?
Some credit cards will charge a fee when you transfer a balance from one card to another. This is often advertised as a percentage of the total amount you are transferring to the new card.

What is a CVC?
'CVC' - stands for Card Verification Code (also known as CVV or CVV2). This is the last 3 digits found on the back of your credit card, near the signature strip. The CVC number is a security feature used to protect card holders when making purchases over the internet or over the phone.

What is a Cash Advance?
When you use your credit card to take money out of a cash point, the transaction is classed as a cash advance. Other transactions that may be classed as a cash advance include gambling transactions or when you buy foreign currency. Beware, you might be charged for making a cash advance or your transactions might be charged with a higher interest rate.

What is the Credit Card Number?
It is the long number (16 digits) found on the front of your card.

What is a Direct Debit?
It is a regular automatic transaction made when you authorise an organisation to collect money from your bank or building society account.

What is a Fixed Rate?
It is an interest rate that will not change for a set period of time.

What is a Foreign Currency Handling Charge?
Some credit card providers will charge you a fee for using your card abroad. This is normally a percentage of each transaction you make on your card. Not all cards charge this fee so it’s worth comparing credit cards if you travel abroad regularly.

What is an Interest Free Period?
When you make a purchase on your credit card you'll have a given number of interest free days before you are charged any interest. If you pay off the balance during the interest-free period, you won’t have to pay more than you have already spent on your credit card.

What is an Introductory Interest Rate?
For a given period of time, a special interest is applied to certain types of transactions. The introductory interest rate usually applies to balance transfers and new purchases. For example, the introductory interest rate on a new card could be 0% interest on new purchases when you first open the account.

What is a Minimum Payment?
It is the minimum amount that your credit card provider requires you to pay each month. The minimum repayment required by card companies can vary but is usually around 2.5% of the total balance or £5, whichever is greater.

What is a PIN?
'PIN' - stands for Personal Identification Number. It is a 4 digit secret code that you choose for your card. You need to use a PIN when you pay for items using your credit card or when you make cash withdrawals using a cash machine.

What is a 0% Purchase Card?
A credit card that lets you borrow money for a short period of time with very little interest charged.For example, a card may offer 0% on Purchases for 12 months from the date you opened the account, which means you would not pay any interest on those purchases until after the offer end date. Some 0% Purchase Cards also have Balance Transfer Offers as well. When you apply for a new card, your application will be considered based on your credit history.

What is a Credit History?
It is a part of your credit report which is held by credit reference agencies. This shows how you have managed your money in the past which includes your credit cards, loans that you have had or mobile phone contracts you have signed up for.

What is a Credit Limit?
It is the maximum amount of money that your credit card company is willing to lend you on a specific credit card. The credit limit will include any interest charged to you so make sure you do not exceed your limit. You might be charged a fee if you do.

What is a Credit Rating?
Card providers will make an assessment of your 'credit worthiness' when making a decision on whether they will lend to you (ie give you a card). This assessment is based on a number of things - including the information you provide on the application form and your credit history (how you have managed your finances in the past). This is provided by credit reference agencies such as Experian, Equifax or Call Credit.

Your credit rating is a score based on your credit report created by the credit reference agencies. It takes all of your credit history and applies an overall score to it based on how you've managed your finances in the past, giving you a good general indication of whether you will be approved or not. It also looks at non-financial information such as court orders i.e. CCJ's, and whether you are on the Electoral Roll.

Most card companies will provide some pre-application criteria or guidelines before you actually start the application - these should always be checked before you start! This will not guarantee being accepted but provides good guidance.

What is a Credit Reference Agency?
Credit reference agencies are companies that collect information about you and then sell on the information to credit providers to help them assess whether they should accept your application or not. They keep track of how many credit cards, store cards or loans you have and how well you are paying them. They also collect non-financial information to create your credit score.

What is a Credit Report?
It is the information held by credit reference agencies about you and your credit history. The credit report is regularly updated and is sold to employers, landlords and credit providers. Your credit report helps people decide whether to accept your application for loans, credit cards, housing or other products.

What is a Credit Score?
The credit score is determined by the information found on your credit application form, your credit report and your credit rating. The provider will the use the credit score to decide if you qualify for credit, as well as your credit limit and the interest rate.