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How is the Credit Card Interest Rate Calculated after the Due Date?

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Created on
May 4, 2023


What’s Inside

Having a credit card in your wallet lets you go about your daily purchases freely. Sure, it feels like heaven picking things from the store without worrying about cash - until you forget to pay back the amount within the due date!

After the specified repayment date, the bank will calculate late fees considering your outstanding balance. So, the cc interest rate will be higher than the standard interest rates you enjoy. You end up paying a lot more than you wanted.

This post will explore how banks calculate credit card interest after the due date.

Understanding Late Payment Interest Calculation

Banks or credit card providers calculate credit card interest rate every month on your outstanding dues. However, the interest rate is mentioned as an APR (Annual Percentage Rate) yearly. Here, the rate may be between 14% and 40%.

So, when you fail to pay the credit card dues on time, the interest increases on the outstanding account balance. This interest is determined per your remaining balance, which you carry forward past the due date.

The more you delay, the higher the interest or late fees. Moreover, the bank will charge you interest even if you pay the minimum due amount.


Banks calculate the interest daily on your outstanding account balance. They also consider other factors which are presented in this formula –

(Total days from transaction date x remaining balance x monthly credit card interest rate x 12 Months) / 365 days

Here, the total days from the transaction date are the days between the due payment date and when you pay. The remaining balance is the outstanding amount on your card after the due date. Further, the monthly interest rate is expressed as APR.

For example, the outstanding amount on your credit card is INR 10000, with a cc interest rate of 3%. The total number of days between the due date and the payment date is 30.

So, banks will calculate your interest like this –

Interest = (30 x 10,000 x 3% x 12) / 365 = 295.89

The total amount you will have to pay will be,

INR 10,000 + 295.89 = INR 10295.89

However, credit card providers might use a different formula for calculating this amount. They might consider additional fees and credit card charges along with your late payment fees, which can increase the amount.

How to Avoid Late Payments?

Remember the due dates to avoid paying high credit card interest due to late payments. Mark them in your calendar or use apps like Google Calendar to receive reminders.

Another effective strategy is to set up auto-payment through your credit card provider. It will allow the company to fetch money from your bank account on the due dates. No more worries about forgetting credit card bills!

The Bottom Line

Ensure you understand late fees' terms and conditions while selecting a credit card. Be clear about how the provider calculates your late payment amount if you don't pay on time. You can also ask them to send you payment reminders if the facility is available.

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Frequently Asked Questions

1. Why Is Credit Card Interest So High?

Credit card interests are high as the borrower might sink into huge debt and never pay off the principal amount. The issuers use the high rates to protect themselves.

2. What Is the Interest Rate On Credit Card After Due Date?

The cc interest rate after the due date will depend on the number of days delayed and the specified monthly interest rate.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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