CoverMapWhat is APR on a credit card?
APR stands for annual percentage rate. Barclaycard describes credit card APR as “the total cost of borrowing over a year, including interest and standard fees.” It turns those costs into one percentage so you can compare cards on a like-for-like basis.
Experian explains that APR includes compulsory charges but not optional or penalty fees. So late payment fees, over-limit fees and payment protection are not part of the APR. A card with a low APR can still cost you money if you pay late.
APR only matters if you borrow. Experian points out that if you pay your balance in full every month, you pay no interest, whatever the APR.
Representative APR and the 51% rule
Most card adverts show a representative APR. The FCA Glossary defines it as an APR at or below which the firm “reasonably expects” that credit will be provided under “at least 51% of the credit agreements” entered into because of the promotion.
In plain terms: at least 51% of people who get the card through that advert should get the advertised rate or lower. Up to 49% can be offered a higher rate. Barclaycard says your personal APR depends on your credit rating and can differ from the representative APR.
The FCA’s consumer credit rules (CONC 3.5) set out when lenders must show these figures:
- Representative example (CONC 3.5.3R): required if an advert “indicates a rate of interest or an amount relating to the cost of credit”.
- Representative APR (CONC 3.5.7R): required if the advert suggests credit is available to people whose access to credit may be restricted, makes a favourable comparison with another product or lender, or offers an incentive to apply.
Barclaycard notes that the advertised APR usually reflects the standard purchase rate. Balance transfer and cash rates can differ and are not included in the representative example.
Purchase, balance transfer and cash rates
One card can charge several different rates. Capital One lists these types:
| Rate type | What it applies to | Interest-free days? |
|---|---|---|
| Purchase rate | Everyday spending on the card | Usually, if you pay in full |
| Balance transfer rate | Debt moved from another card | No, unless a 0% promotion applies |
| Cash transaction rate | Cash withdrawals and similar | No – interest starts straight away |
| Money transfer rate | Money sent from the card to a bank account | – |
| Promotional rate | Introductory deals, such as 0% periods | For the set promotional period |
| Penalty rate | Can apply after certain breaches of the card terms | – |
Source: Capital One; ClearScore; Barclaycard. Checked October 2026.
Why using a credit card for cash is expensive
Capital One says cash advances come with higher APRs, “plus a fee (usually 3% to 5%)”. Barclaycard’s typical cash withdrawal fee is 2.99%. Barclaycard also charges interest on sterling cash “from the date of your transaction”, even if you pay the full balance by the due date.
The same applies on most 0% cards. MoneySavingExpert (MSE) says interest on cash is usually charged from the date of the withdrawal, because 0% deals rarely cover cash.
Interest-free days: how to pay no interest on purchases
HSBC says most cards give you “up to 56 days” to repay before interest is applied. The exact period varies by card, so check your own terms.
The interest-free period only works if you clear your balance in full by the due date. HSBC says that if you don’t, interest runs from the date of each transaction. ClearScore adds that to keep the interest-free period you usually need to pay this month’s balance in full and have paid last month’s in full. Cash and balance transfers do not get interest-free days unless a 0% deal applies.
How credit card interest is calculated
Experian says providers usually calculate interest monthly or daily. Capital One explains its own method: interest is worked out daily, with the APR divided by 365 and applied to the outstanding balance. Because unpaid interest is added to the balance, you can end up paying interest on interest.
This is why the timing of payments matters. Paying earlier in the month, or paying more than the minimum, reduces the balance that interest is charged on.
What is the average credit card APR in the UK?
Bank of England figures show the average effective rate on UK credit cards that charge interest was 21.55% in August 2026, up from 21.45% in July. The figures come from its Money and Credit release, published on 29 September 2026.
The same release shows people borrowed a net £1.2bn on credit cards in August 2026, with credit card borrowing growing at 13.3% a year.
This average is not the same as the advertised APR on new cards. It reflects what people with interest-charging card balances actually pay. To see how advertised rates compare across cards, see our guide to UK credit cards.
The real cost of paying only the minimum
FCA rule CONC 6.7.5R says the minimum repayment must cover at least the interest, fees and charges, “plus one percentage of the amount outstanding”. Card providers often set it higher. Bank of Scotland’s minimum is 2.5% of the statement balance plus interest and fees, or £5, whichever is higher. Experian says minimums are usually 1–2.5% of the debt plus interest and fees, or £5 to £25.
Because the minimum falls as the balance falls, paying only the minimum can take decades. Two published examples show the difference a fixed payment makes:
| Example | Minimum payments only | Fixed payment instead |
|---|---|---|
| £3,000 at 24% (Bank of Scotland) | Starts at £84 a month; 28 yrs 3 mths; £5,214 interest (£8,214 paid in total) | £124 a month: 2 yrs 9 mths; £981 interest |
| £2,000 at 26% (Experian) | Starts at £59 a month; 25 yrs 3 mths; £3,670 interest | Fixed £59 a month: 4 yrs 8 mths; £1,297 interest |
Source: Bank of Scotland and Experian worked examples. Checked October 2026.
The Experian example is striking: you start by paying the same £59. Keeping it fixed, rather than letting it fall, cuts more than 20 years off the debt.
Persistent debt: the FCA’s 18, 27 and 36-month rules
The FCA requires card firms to watch for persistent debt. Under CONC 6.7.27R, this means that over the previous 18 months you paid less towards the balance itself than you paid in interest, fees and charges. The rules work in stages:
- 18 months: the firm must contact you. The FCA’s February 2018 policy statement (PS18/4) says it must explain the benefit of paying more and give contacts for free debt advice.
- Around 27 months: the firm reviews your repayments again 9–10 months later (CONC 6.7.29R). PS18/4 says it repeats the message and warns that your card may be suspended.
- 36 months: if you are still in persistent debt (CONC 6.7.30R), PS18/4 says the firm must offer ways to repay, usually over three to four years. If you can’t afford that, it should offer forbearance, such as reducing, waiving or cancelling interest and charges. The card may be suspended.
Separately, CONC 6.7.10R says that if you are at risk of financial difficulty, the firm must not raise your interest rate, except when a promotional rate ends.
Eligibility checkers: soft search vs hard search
Many providers let you check your chances before applying. HSBC says its eligibility check “involves a soft credit search. This will not affect your credit score.”
A full application is different. Zable explains that it uses a hard search, which is recorded on your credit file and visible to other lenders. It can cause a small, temporary dip in your score. Experian and Equifax keep hard searches for 12 months; TransUnion keeps them for 2 years. Several applications close together have a bigger effect. Learn more in how credit scores work in the UK.
How to keep credit card interest low
- Pay in full by the due date if you can, so purchases stay interest-free.
- Set up a fixed payment above the minimum, rather than letting the payment shrink with the balance.
- Avoid cash withdrawals on a credit card. You pay a fee and interest from day one.
- Look at 0% deals for existing debt. Barclaycard gives an example: £1,200 at 19.9% APR, repaid at £100 a month, takes 14 months and costs £135 in interest. A 0% balance transfer instead would cost about £6 in fees over 12 months. See balance transfer vs 0% purchase cards.
- Use an eligibility checker before applying, to avoid unnecessary hard searches.
- Never miss a payment. Late fees are not in the APR, and a missed payment can end a 0% deal.
If you are struggling with card debt, free debt advice is available, and under FCA rules your card provider must give you contacts for it if you are in persistent debt. You can also read our guide to debt consolidation.
Frequently Asked Questions
What does APR mean on a credit card?
APR (annual percentage rate) is the yearly cost of borrowing on the card, including interest and compulsory standard fees. It does not include optional or penalty fees such as late payment charges.
What is representative APR?
It is the rate the lender expects to give to at least 51% of people who take out the card through that advert, under the FCA Glossary definition. Up to 49% can be offered a higher rate, depending on their credit history.
Do I pay interest if I pay my credit card in full?
Not on purchases, as long as you pay the full balance by the due date. Most cards give up to 56 days interest-free. Cash withdrawals usually attract interest from the day you take them out.
What is a good APR on a credit card in the UK?
There is no single figure. As a benchmark, Bank of England data shows the average effective rate on interest-charging UK credit cards was 21.55% in August 2026. The rate you are offered depends on your credit history.
Is credit card interest charged daily?
Some providers calculate it daily and some monthly. Capital One, for example, divides the APR by 365 and applies it to your balance each day, so unpaid interest can itself attract interest.
Does checking my eligibility affect my credit score?
Eligibility checkers use a soft search, which other lenders can't see and which does not affect your score. A full application uses a hard search, which stays on your file for 12 months to 2 years depending on the credit reference agency.
What happens if I only pay the minimum for a long time?
It can take decades to clear the debt. If you pay more in interest and charges than off the balance for 18 months, FCA rules require your card provider to contact you, and further steps follow at around 27 and 36 months.
Sources
- Bank of England – Money and Credit, August 2026 (published 29 Sep 2026)
- FCA Handbook – Glossary: representative APR
- FCA Handbook – CONC 3.5 Financial promotions
- FCA Handbook – CONC 6.7 Post contract: business practices
- FCA – PS18/4 Credit card market study (Feb 2018)
- Barclaycard – What is a credit card APR?
- Barclaycard – Cash withdrawal fee
- Experian – What is APR?
- Experian – Credit card minimum payments
- Capital One – How does credit card interest work?
- HSBC – What is an interest-free period?
- ClearScore – Credit card interest-free periods explained
- Bank of Scotland – Minimum payments
- HSBC – Credit card eligibility checker
- Zable – Does applying for a credit card affect your credit score?