Interest rate on credit cards is one of the most ignored aspects by many of the credit card users. Every credit card issuer charges interest on credit card overdue payment on a monthly basis, so does the HDFC Bank. HDFC credit cardholders must know how the bank charges interest rate on unpaid credit card bills, what kind of payments attract interest charges, how interest rate is calculated and other related details specific to their credit card to make most of their credit card’s interest-free period feature and revolving credit facility.
Technically called finance charges, credit card interest charge is the penalty levied or the interest collected by HDFC Bank in case you choose not to pay your credit card balance in full. Which means when you choose to pay only the minimum amount due or an amount lesser than that the bank will charge interest on the remaining amount and all new transactions till the outstanding is cleared in full.
Do note that the interest will be levied only when you don’t pay your credit card bill in full or when you withdraw cash using your HDFC credit card.
Popular Bank's Credit Card Interest Rates
HDFC charges interest at a monthly percentage rate (MPR) on all the applicable transactions from the date of purchase till the amount is paid back in full. The finance charges are added to the monthly credit card billing statement till the outstanding is cleared in full.
Based on the daily balance method, HDFC calculates interest on a particular amount using the formula -
(Total Outstanding Amount x 13% per month x 12 months) X number of days] / 365 days
To this interest, it will add late payment fee, and GST @18% on interest charges to calculate the total amount due on your HDFC credit card.
Interest rates charged by HDFC Bank may go up to 3.4% p.m. or 40.8% p.a. However, the rate of interest charged by the bank may differ from credit card to credit card, your relationship with the bank, and on the usage of your card.
If you pay the total amount due (TAD) on your HDFC credit card before the due date, the interest charges will not be applied. Let’s see the cases when the finance charges are applicable on HDFC credit card transactions.
Credit card interest-free period or grace period is the time between a HDFC credit card transaction date and the credit card payment due date. It hence varies for every transaction made on your HDFC credit card. Typically, HDFC offers an interest-free period up to 50 days. If you make the payment within the interest-free period, i.e., on or before the due date, you don’t have to pay any interest. This means you have enjoyed the credit facility at zero interest.
When you clear the entire outstanding due as per the statement within the due date, HDFC Banks stops charging interest immediately.
HDFC Bank typically considers 5% of the total outstanding on the account as minimum amount due.
Cash withdrawals, unlike card transactions, attract finance charges from the date of withdrawal till the amount is paid in full. Hence, the bank might have charged interest on your credit card. Instead of waiting for the due date, pay your current month’s bill to prevent interest charges to increase.
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