How interest accrues on credit card purchases

Credit card providers use different methods to determine when a credit card purchase will begin to attract interest. It's important to understand which method is being used, particularly for cards that have an interest free period. Cash advances accrue interest from the day of the transaction.

The purchase date method:

Items or services paid with a credit card will attract interest from the date that they are purchased. In these circumstances the interest free period is lost unless you pay the entire outstanding balance by the due date.

The issue date method:

This method back dates interest charged to the day that the monthly statement was issued and reduces the interest free period unless you pay the entire outstanding amount by the due date.

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