Credit Card Interest Rates
To help readers of this article understand credit card interest rates, Jean Scheid uses her personal MasterCard as an example. Initially, the card offered a 5.9% interest rate and balance transfers from another card were free. As long as the entire monthly balance due was paid in full, by the due date, the interest rate was 5.9% on all charges made on the card.
If Jean used the card for a large expense where she was unable to pay the entire balance in full each month, the interest rate would jump to 27.24%. That high interest rate would remain each month until the entire balance was paid in full. In addition, any charges made on the card while the first large expense is being paid off are not 5.9% but the higher 27.24%. So in effect, Jean only receives the 5.9% if she pays the entire balance in full every month.
Cash advances on Jean's card clearly state the interest rate will be 27.24% all the time. A cash advance can be done at an ATM machine or by the checks credit card companies send you; both are considered cash advances. Before you decide to use your credit card for a cash advance, read the fine print, your interest rate is not what you might think.
If a monthly payment is received after the due date, even if the monthly balance is paid in full, a 27.24% finance charge is tacked onto Jean's account along with late fees. Late fees vary from card to card so make sure you know how much extra you will be paying if you send in your payment late.