APR, interest rates and fees explained

It’s easy to be confused by the different interest rates and fees that can be charged to your credit card account. Below, we’ve listed the terms you’re likely to see and explained what these rates and fees mean for you.

1.

APR

APR stands for annual percentage rate. It tells you how much it’s likely to cost you to borrow money over one year. You'll see it as a percentage.

It’s not just about the interest you’ll pay. APR factors in both interest and any fees that are automatically charged to your account. This gives you a good idea of the overall cost and is useful if you’re comparing credit cards. Read our guide to find out more about APRs.

Back to top
2.
Credit card interest rates

Interest is the cost of borrowing money. The amount of interest you’ll pay is worked out as a percentage of the money you borrow – this percentage is called an interest rate.

Interest rates can vary depending on how you use your credit card. There are four types:
- Purchase rate
  The interest you’ll be charged when you use your credit card to buy things. Normally you’ll have an interest-free period of up to 56 days if you pay the balance in full by the due date. Otherwise, interest is charged from the transaction date.
- Balance transfer rate
  The interest you’ll be charged when you move the balance from one credit card or store card to another credit card. Find out more about balance transfers.
- Money transfer rate
  The interest you’ll be charged when you move money from your credit card to any of your UK current accounts. Find out more about money transfers.
- Cash transaction rate
  The interest you’ll be charged for cash transactions. These include using your available credit to obtain cash (e.g. at an ATM or at an over-the-counter service), gambling transactions, using your card to make transactions at casinos, betting outlets and bookmakers, and buying online lottery tickets or gaming chips, share trading or spread betting, buying foreign currency, sending money orders or wire transfers (other than balance transfers or money transfers), buying coins, banknotes or digital currency, paying government or court fines, enforcement penalties, fees or costs, online trading such as share dealing or investments, purchasing or topping up electronic money, payment cards, mobile wallets or account dashboard services.
Back to top
3.

Promotional rates

A promotional rate is a low or 0% interest rate offered for a set period of time. When this period ends, the standard rate will take its place. Promotional rates can be offered on balance transfers, money transfers and purchases. These offers can save you money, but look for what suits you and check if fees apply. For example, you may still get charged a fee for a balance transfer that has a 0% interest rate.
Back to top
4.
Credit Card Fees

Fees are charged to your credit card as either a percentage of a transaction or as a default charge of £12. Here are the most common types of fee you’ll see on Bank of Scotland cards

Transaction fees
- Balance transfer fee
  This is the fee you’ll be charged when you move the balance from one credit or store card to another credit card. Find out more about balance transfers.
- Money transfer fee
  This is the fee you’ll be charged when you move money from your credit card to any of your UK current accounts. Find out more about money transfers.
- Card processing fee
  Some companies charge a fee for using your card for gambling transactions, buying postal orders or entering competitions.
- Using your card abroad
  You may be charged additional fees and interest for making non-sterling transactions or buying non-sterling currency. Find out more about using your card outside of the UK.
Cash transaction fee

When using your credit card or card number, a cash transaction fee may apply for:
- Using your available credit to obtain cash (e.g. at an ATM or at an over the counter service).
- Gambling transactions, using your card to make transactions at casinos, betting outlets and bookmakers, and buying online lottery tickets or gaming chips, share trading or spread betting.
- Buying foreign currency.
- Sending money orders or wire transfers (other than balance transfers or money transfers).
- Buying coins, banknotes or digital currency.
- Paying government or court fines, enforcement penalties, fees or costs.
- Online trading such as share dealing or investments.
- Purchasing or topping up electronic money, payment cards, mobile wallets or account dashboard services.
Default charges
- Late payment fee
  You may be charged if you do not make your minimum payment by the due date on your statement.
Have you had a default charge?
If you’ve missed a payment or gone over your credit limit, there are steps you can take to get back in control.

Read our top tips for managing your credit card
Back to top