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What does interest rate mean? Purchase or Limit

Clorets90

Hero Member
Apr 17, 2017
238
6
Hello

Thank you all for the answers...
I was thinking of the interest rate ( I have totally ZERO knowledge about credit card system)
My question is about the interest rate is it for the limit (credit limit e.g. 5000$) so does it mean I will pay every month interest to the bank without using the card? Or it's just when I buy something I find it tricky to understand it.
Thanks
 

torontosm

Champion Member
Apr 3, 2013
1,647
254
Hello

Thank you all for the answers...
I was thinking of the interest rate ( I have totally ZERO knowledge about credit card system)
My question is about the interest rate is it for the limit (credit limit e.g. 5000$) so does it mean I will pay every month interest to the bank without using the card? Or it's just when I buy something I find it tricky to understand it.
Thanks
You will pay interest on the total amount you have borrowed on the credit card by the end of the month. So, for example, if you spend $10 on coffee each day during the month, you will get a bill for $300 at month's end. If you don't pay the bill in full, you will be charged interest on the remaining amount that you carry forward.
 
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BC4life

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Hello

Thank you all for the answers...
I was thinking of the interest rate ( I have totally ZERO knowledge about credit card system)
My question is about the interest rate is it for the limit (credit limit e.g. 5000$) so does it mean I will pay every month interest to the bank without using the card? Or it's just when I buy something I find it tricky to understand it.
Thanks
Assuming you are talking about credit cards, the interest is basically the cost of borrowing. You are charged interest on your outstanding balance (amount you did not pay by the due date).

As long as you pay your due amount (as per latest credit card statement) in full and before due date you have nothing to worry about interest. The same applies if you are not using the card. Just having a credit limit does not mean you will be charged interest on it.
 
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Clorets90

Hero Member
Apr 17, 2017
238
6
So as far as I can understand is if the limit is xxxx $ I will not pay any penny unless I use an X amount! ....

So what is the annual purchase rate interest? Even if I do not use the credit (let's assume I will put it aside ) I will still must have to pay it?
 

BC4life

Hero Member
Nov 5, 2015
545
111
Toronto, ON
Visa Office......
HKVO
NOC Code......
0125
Nomination.....
06-10-2016
AOR Received.
07-12-2016
IELTS Request
Upfront
Med's Request
Upfront
Med's Done....
19-12-2016
Passport Req..
28-02-2017
VISA ISSUED...
09-03-2017
LANDED..........
XX-07-2017
So as far as I can understand is if the limit is xxxx $ I will not pay any penny unless I use an X amount! ....

So what is the annual purchase rate interest? Even if I do not use the credit (let's assume I will put it aside ) I will still must have to pay it?
I don' think you understood since you are still referring to your credit limit. There is no (direct) relationship between credit limit and interest. If you spend $5 and your credit limit is $5,000, and you don't pay the $5 by the due date, you are charged interest on the $5 (not $5,000). Keep in mind that minimum payment apply for most cards if you carry a balance.

Interest rates values are given for 12 months (annual rate), so to get your monthly interest rate you need to divide by 12.

There are lots of information on credit card online (Google) so you will need to take the time to learn more. You can start by this link https://www.creditcardscanada.ca/education-centre/credit-card-basics/understanding-credit-card-costs/
 
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Clorets90

Hero Member
Apr 17, 2017
238
6
Yes I'm newbie for these things I never used a credit card before as my country of origin does not have this system!

Thank you very much. Sorry I'm asking a lot.