The Mastercard interest rate could be anywhere between 9.99% to 36%, depending on the card and each applicant’s creditworthiness. However, keep in mind that the interest rate isn’t actually set by Mastercard. The issuers are in control of setting the rates. As a card network, Mastercard is more about where the card is accepted than anything else.
What you should know about credit cards’ interest rate:
Generally, the better your credit history, the better the interest rate. For example, the Bank of America® Customized Cash Rewards credit card interest rate ranges from 18.24% to 28.24% Variable, depending on your credit.
Rewards cards like the Citi Premier® Card – 20.24% to 28.24% (V) – often have higher maximum interest rates to compensate for the additional benefits. This could also be a sign that more than just people with good credit can get approved.
Credit cards will always have multiple interest rates. There are separate rates for purchases, balance transfers, cash advances and late payments. Cash advance APRs range from 24.99% to 30.74%. Penalty interest rates for late payments can be a maximum of 29.99%. The Citi Simplicity® Card doesn't have a penalty interest rates, for example.
Nearly all Mastercard interest rates are variable rather than fixed. Variable rates are tied to an index rate, usually the prime rate that banks use for their most creditworthy customers.
If a Mastercard with the lowest possible interest rate is your priority, you may need to look beyond the big banks and explore options from credit unions. Credit unions have specific membership requirements, so check to make sure you’re eligible.
To find the interest rate on your credit card, look at your cardmember agreement and your monthly credit card statements. Your interest rate will be there in the form of an annual percentage rate (APR). But as “annual” implies, an APR is the cumulative interest rate for a whole year, which isn’t all that helpful for calculating actual interest charges from day to day or month to month.… read full answer
You can figure your daily interest rate – or daily periodic rate – by dividing your APR by 365 (days in a year) because credit card interest compounds daily. (It’s worth noting that some card issuers may divide by 360 rather than 365). This calculation will give you the actual daily rate at which you accrue interest on a card. If your APR is 19.99%, your daily periodic rate would be 0.0547%.
The terms APR and interest rate are often used interchangeably. For general purposes, they express the same idea, though you’ll get a much better sense of your actual “interest rate” by using the daily periodic rate.
It’s worth noting that most credit card rates change (indicated in terms by a V next to your APR). So if the so-called prime rate that credit card APRs are tied to goes up, your rate will rise, too. A credit card agreement may note that the account’s APR is the prime rate plus a certain fixed percentage. Or, your rate might rise to a penalty APR (also found in credit card terms) if you miss a payment. Your card issuer must notify you of a rate change 45 days before it takes effect, unless you’re 60 days or more past-due on payment.
Though it’s good practice to keep an eye on your APR, interest rates don’t matter if you pay your credit card bill in full every month. If you aim to pay no interest, you won’t have to worry about crunching these numbers.
A good interest rate on a credit card is 14% and below. That is roughly the average regular interest rate on credit cards for people with excellent credit. Even a relatively good interest rate on credit cards for people with lower scores is not all that low. For example, credit card users with good or fair credit could pay interest at an annual rate of 20%+ and still have a below-average APR. Better-than-average for a credit card overall isn’t much below 20%, either. That’s why the best interest rate on a credit card is 0%.… read full answer
How to Get a Good Interest Rate on a Credit Card
There are three ways to get the best possible credit card interest rate.
For starters, lots of credit cards offer 0% APR periods as introductory perks for new customers. They can be a great help to people looking to finance a large purchase or transfer a debt to pay it off faster. But those intro periods are always temporary. Most (but not all) 0% APR credit cards require good credit or better, too.
The second way to avoid credit card interest altogether is to pay your full statement balance by the due date every billing period. Setting up automatic monthly bill payments from a bank account can be a big help with that. You can also try the “Island Approach”, which is a method of using multiple credit cards for different expenses. For example, you could use your lowest-rate card—maybe even a card with a 0% APR period—for things you’ll need to pay off over a period of time, and a rewards card for everyday purchases that you pay off every month. That way, you wouldn’t pay interest at all, no matter what rate you have on the rewards card.
Ultimately, there is also a number of things you can do to raise your credit score and, in turn, get a better shot at a good interest rate on your next credit card. Because if a low credit card APR is your objective, it truly pays to have an “excellent” credit score of 750 or higher.
You can figure out how much interest you will pay on your credit card by dividing the card’s APR by 365. Then, multiply the result by your average daily balance and, subsequently, the number of days in the billing period. The interest charges you owe will also be listed on the credit card’s monthly statement. Still, the easiest way to determine how much interest you will pay on a credit card is to use WalletHub’s … read full answercredit card payoff calculator. It’s a free tool that allows you to input the amount of debt you have (or will have) and your interest rate to get a payoff plan and a cost estimate.
You can set a payoff date, and we’ll tell you what monthly payments you’ll need to make. Or you can set a fixed monthly payment, and we’ll tell you how long it will take to pay off. We’ll also tell you the total amount of interest you can expect to pay and even which credit cards can save you the most money.
Even if you use a credit card calculator, however, it’s still a good idea to know how to crunch the numbers yourself.
How to Calculate Credit Card Interest Charges
1. Find your credit card’s APR
Your credit card’s APR will be listed in your cardmember agreement and on your monthly credit card statements.
2. Divide your APR by 365
An APR reflects the annual cost of borrowing, but credit card charges are assessed daily. Dividing by the number of days in a year gives you the daily interest rate – or daily periodic rate – for your credit card.
3. Multiply the daily interest rate by your average daily balance
Your average daily balance is the sum of your balances for each day in the billing period divided by the number of days in the billing period.
4. Multiply the resulting amount by the number of days in the billing period
When this calculation is done, you will have the interest charges due for the billing period. Just bear in mind that some details do vary by credit card company.
Whether you use WalletHub’s calculator or calculate credit card interest charges by hand, you should first understand the basics of how credit card interest works. We’ll highlight some key points below.
Key Things to Know About How Much Interest You’ll Pay on Your Credit Card
If you pay off your balance in full by your due date, you won’t owe any interest.
If you carry a balance from month to month, the interest you’ll owe depends on your Annual Percentage Rate (APR). That shows how much interest you’d pay in a year. But since credit card interest gets charged daily, your card’s interest rate is its APR divided by 365.
Credit card interest compounds daily, which means the interest rate applies to your whole balance at the end of each day, including unpaid interest charges from previous days.
Nearly all credit card APRs are variable, as opposed to fixed, meaning they’re based on a particular benchmark interest rate. This usually is the prime rate, which banks use when lending to each other.
Many cards offer lower introductory APRs on purchases and balance transfers for a limited time, often starting at 0%. Once the introductory period ends, the APR will change to the normal rate.
There’s no way to tell you how much interest you’ll owe without knowing your card’s balance and APR as well as the monthly payment you can afford. But if you plug that info into WalletHub’s calculator, you’ll have your answer in no time.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. This question was posted by WalletHub. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation "Sponsored", where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.