Credit Card Interest Rates

Anyone who's ever owned a credit card will agree that understanding how credit card interest rates work, how it is charged and why it varies from one issuer to another can sometimes be a daunting task. The truth is, although it requires that you are familiar with your numbers a little bit, knowing what you need to know about your card isn't that hard; it is something you can do simply by reading articles, just like this, online or by talking to your card issuer or your bank.

If you already own a credit card, or are looking at getting one, you may want to educate yourself a little bit about interest rates. According to Wikipedia.com, "credit card interest is the principal way in which card issuers generate revenue. A card issuer is a bank that gives a consumer (the cardholder) a card or account number that can be used with various payees to make payments and borrow money from the bank simultaneously." In other words, banks charge customers (credit card holders) a certain percentage owned on their card so as to generate income. This percentage is what is referred to as Interest rates and may vary from bank to bank and from country to country - between 5 and 39% in most countries.

Getting a credit card isn't that hard in most countries these days, so long as you meet the issuer's criteria. Today, banks even make cards available to customers online but, sometimes, pending a credit check for security reasons. In South Africa alone, there are a number of renowned credit card issuers with one of the most popular being Virgin Money. Virgin Money launched in Johannesburg sometime in 2006 and has played a big part in the credit card industry by providing one of the cheapest interest rates in the region. During the launch, Sir Richard Branson, founder and CEO of the Virgin Group, said banking was, like telecommunications, a corner of the South African economy where consumers were “being fleeced” by the four biggest banks. This statement came as a result of the fact that Virgin believed other banks were charging customers more than what they should.

Over the years, the Virgin Money credit card has significantly maintained being one of the cheapest (if not the cheapest). At the time of its launch, it was known to be cheaper than cards offered by Nedbank, Standard Bank, First National Bank or Absa, with no annual card fees, lower interest rates, and lower fees at ATMs. This development has led the Competition Commission announced a public inquiry into bank fees and the national payments system; a move which has proven to be a big step in the banking industry.