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Credit card basics: grace periods, utilisation and rewards

How card interest is actually charged, why utilisation matters, and when rewards are worth paying an annual fee for.

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The grace period

Paying the full statement balance by the due date normally means no interest on purchases. Carrying a balance can suspend that protection, so new purchases start accruing interest immediately until the balance is cleared in full again.

Utilisation

Utilisation is the reported balance divided by the limit. Issuers usually report the statement balance, so paying before the statement closes lowers the figure that reaches the bureaus, even if you already pay in full every month.

Do the rewards arithmetic

Estimate your annual spending in the categories the card rewards, apply the earn rate, then subtract the annual fee. Value only exists if the result is positive and you never pay interest on a carried balance.

Avoid cash advances

Cash advances normally carry a fee, a higher rate and no interest-free period. They are among the most expensive ways to use a card.

Sources and further reading

Where a figure or rule is cited, the issuing body's own publication is authoritative and may have changed since our last review.

How this page was produced

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MoneyLoanHub Editorial Team
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MoneyLoanHub Review Desk

Content is researched from regulator and provider documentation, written to be neutral, and re-checked when rules or product terms change. Read our editorial policy.

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