Credit card borrowing in the UK has been growing. Bank of England figures published on 1 September 2026 show that the annual growth rate of credit card borrowing was 12.5% in July 2026. The same release puts the average effective interest rate on interest-charging credit cards at 21.45% in July 2026. This is an average across all such balances held with UK banks and building societies, not the rate on any particular card. [Source: Bank of England, Money and Credit – July 2026]

This article explains how credit card interest is charged and how payment choices change the total interest paid. It is general information, not financial advice.

ClearScore is a credit broker, not a lender.

Basic Credit Card Rules

How credit card interest is charged

Many cards don't charge interest on purchases if you pay the full statement balance by the due date. Barclaycard, for example, describes this as up to 56 days interest-free on purchases. This interest-free period doesn't generally apply to cash withdrawals or to balance transfers once any promotional period has ended. Some cards charge interest on cash withdrawals from the date of the transaction. The exact terms are set out in each card's terms and conditions and summary box.

Minimum payments, missed payments and credit limits

Missing a minimum payment, or going over your credit limit, can lead to a fixed fee (depending on the card's terms, but often around £12). It can also be recorded on your credit file, and it can lead to a higher interest rate on the account.

FCA rules require a credit card's minimum payment to be at least the interest, fees and charges for the month plus 1% of the balance. Card providers set their own formula above this. Many also set a minimum payment floor, a fixed £ amount that applies when the formula works out lower. ClearScore's review of card terms found floors of £5 on most cards and between £10 and £25 on some.

How the size of your monthly payment affects total interest

The example below assumes a £3,000 balance at an illustrative 25% APR, with no new spending, fees or rate changes, and interest calculated monthly.

• Paying only a minimum of interest plus 1% of the balance, with a £5 floor, the first payment is £86.31, of which £56.31 (65%) is interest. Repaying the balance in this way would take 341 months (about 28 years), with total interest of £5,415.

• With the same formula but a £25 floor, repayment takes 181 months (about 15 years), with total interest of £4,551. The floor applies once the balance falls below about £869, so a higher floor shortens the final stage of repayment.

• A fixed payment of £100 a month repays the balance in 45 months, with total interest of £1,453.

• A fixed payment of £150 a month repays the balance in 26 months, with total interest of £797.

Results will differ with a different balance, rate or minimum payment formula.

Under FCA rules, you're in persistent debt if, over 18 months, you've paid more in interest, fees and charges than you've repaid of the money you actually borrowed. Your card provider must then write to you, explain how paying more would help, and give details of free debt advice. About nine months later (27 months), it must check again and, if the pattern looks likely to continue, contact you again. At 36 months, if you're still in persistent debt, it must offer ways to repay the balance more quickly, usually over three to four years. If you don't respond or don't take up an affordable option, the provider must suspend or cancel the card.

0% promotional periods

On a 0% purchase or balance transfer offer, card terms commonly say that a missed payment, or going over your credit limit, can end the promotional rate early. From then on, interest is charged at the card's standard rate. Any balance left when the 0% period ends is charged interest at the standard rate from that point, and that rate is shown in the card's summary box.

Balance transfers

A balance transfer moves existing card debt to another card, often with a 0% introductory rate for a set period. A transfer fee usually applies, commonly a percentage of the amount transferred (see what is a balance transfer). The 0% rate normally depends on making at least the minimum payment on time and staying within your credit limit.

Applying for a new card results in a hard search on your credit file. Most hard searches stay on your file for 12 months, and several in a short period can affect your credit score for a time. Checking your eligibility beforehand uses a soft search, which lenders can't see. Eligibility and acceptance are decided by each lender and depend on its own criteria and checks. Checking your eligibility does not guarantee that you'll be accepted.

ClearScore is a credit broker, not a lender. This article doesn't cover every product or provider in the market.

Figures correct as of 28 September 2026.