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APR, interest rates and fees explained

It’s easy to be confused by the different interest rates and fees that can be charged to your credit card account. Below, we’ve listed the terms you’re likely to see and explained what these rates and fees mean for you.

  1. APR

    APR is how much it’s likely to cost you to borrow money over one year. You'll see it as a percentage.

    It’s not just about the interest you’ll pay. APR factors in both interest and any fees that are automatically charged to your account. This gives you a good idea of the overall cost and is useful if you’re comparing credit cards.

    APR stands for annual percentage rate.

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  2. Credit card interest rates

    Interest is the cost of borrowing money. The amount of interest you’ll pay is worked out as a percentage of the money you borrow – this percentage is called an interest rate.

    Interest rates can vary depending on how you use your credit card. There are four types:

    • Purchase rate
      The interest you’ll be charged when you use your credit card to buy things. Normally you’ll have an interest-free period of up to 56 days if you pay the balance in full by the due date. Otherwise, interest is charged from the transaction date. 
    • Balance transfer rate
      The interest you’ll be charged when you move the balance from one credit card or store card to another credit card. Find out more about balance transfers.
    • Money transfer rate
      The interest you’ll be charged when you move money from your credit card to any of your UK current accounts. Find out more about money transfers.
    • Cash transaction rate
      The interest you’ll be charged for cash transactions. These include withdrawing cash from a Cashpoint, buying non-sterling currency and gambling. Interest on cash is always charged from the date of the transaction.

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  3. Promotional rates

    A promotional rate is a low or 0% interest rate offered for a set period of time. When this period ends, the standard rate will take its place. Promotional rates can be offered on balance transfers, money transfers and purchases. These offers can save you money, but look for what suits you and check if fees apply. For example, you may still get charged a fee for a balance transfer that has a 0% interest rate.

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  4. Credit card fees

    Fees are charged to your credit card as either a percentage of a transaction or as a default charge of £12. Here are the most common types of fee you’ll see on Lloyds Bank cards:

    Transaction fees

    • Balance transfer fee
      This is the fee you’ll be charged when you move the balance from one credit or store card to another credit card. Find out more about balance transfers.
    • Money transfer fee
      This is the fee you’ll be charged when you move money from your credit card to any of your UK current accounts. Find out more about money transfers.
    • Cash advance fee
      You can be charged for withdrawing cash from a Cashpoint using your credit card.
    • Card processing fee
      Some companies charge a fee for using your card for gambling transactions, buying postal orders or entering competitions.
    • Using your card abroad
      You may be charged additional fees and interest for making non-sterling transactions or buying non-sterling currency. Find out more about using your card abroad.

    Default charges

    • Overlimit fee
      Your credit limit is the maximum amount of money you can borrow on your account. If you go over this limit, you may be charged.
    • Late payment fee
      You may be charged if you do not make your minimum payment by the due date on your statement.

    Have you had a default charge?

    If you’ve missed a payment or gone over your credit limit, there are steps you can take to get back in control.

    Read our top tips for managing your credit card

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If you’re struggling to make your credit card payments, please let us know.

Our trained advisers can give you guidance on paying off your credit card debt. We can talk to you about payment options and we may be able to offer a more affordable plan based on your personal circumstances.

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