How business credit card interest is calculated
What the purchase rate actually does to a carried balance, why the representative APR is a different number, and exactly how our calculator turns a rate into pounds. Every figure here is read from the issuer's own page on or after 21 Aug 2026.
Pay in full and the rate never applies
Every card we track gives an interest-free period on purchases: pay the full statement balance by the due date and nothing is charged, however high the rate. The period is usually quoted as “up to 56 days”, which is the gap between a purchase made on the first day of a statement period and the payment due date for that statement. A purchase made on the last day of the period gets about 25 days. Cash withdrawals are different: they carry a fee and attract interest from the day of withdrawal, with no interest-free period at all.
Carry a balance and interest is worked out daily
Issuers divide the purchase rate by 365 and apply that daily rate to each day's balance, then add the total to your account at the statement date. The shorthand that gets within pennies of it is one twelfth of the rate applied to the balance for the month. On Barclaycard Select Cashback, purchase rate 25.5%:
- Monthly rate: 25.5% ÷ 12 = about 2.13% a month.
- Carry £5,000 for a month: £5,000 × 2.13% = about £106 of interest.
- Carry it for a year without paying it down: about £1,275, and a little more in practice, because each month's interest joins the balance and earns interest itself.
The part that catches people out is what happens when a statement is paid only in part. Paying, say, £4,000 of a £5,000 statement does not leave £1,000 attracting interest. It removes the interest-free period from the whole statement, so interest runs on every purchase from the date it was made until it is repaid, and new purchases start accruing straight away. That is why the calculator asks whether you pay in full and treats “mostly” as a caution rather than a discount.
Purchase rate and representative APR are different numbers
The purchase rate is the one applied to a carried balance. The representative APR is a regulated comparison figure: the total cost of borrowing an assumed £1,200 for a year, with the annual fee rolled in, expressed as a rate that at least 51% of accepted applicants must get. On a card with no fee the two are the same. On a card with a large fee they diverge sharply. The widest gap we track is BA Amex Accelerating Business: purchase rate 26.6%, representative 104.9%, because £250 a year is a big number against a £1,200 limit. Neither figure is wrong. One tells you what a balance costs; the other tells you what the card costs if you borrow a little.
What carrying £5,000 costs on every card
A year of simple interest on £5,000 carried at each card's purchase rate, lowest first. Charge cards must be cleared each month, so they have no purchase rate to apply; cards with an opt-in facility to carry a balance are shown at that rate. A “from” rate is the issuer's best case, not what most applicants get.
| Card | Purchase rate | Interest on £5,000 carried a year | Representative APR |
|---|---|---|---|
| Capital on Tap Free Rewards | 13.86% (a “from” rate) | £693 | not published |
| Capital on Tap Pro | 13.86% (a “from” rate) | £693 | not published |
| Funding Circle Cashback Card | 14.9% (a “from” rate) | £745 | 34.9% |
| Lloyds Business Credit Card | 14.9% | £745 | 15.95% |
| HSBC Commercial Card | 15.9% | £795 | 22.0% |
| RBS / NatWest Business Card | 16.9% | £845 | 24.3% |
| Metro Bank Business Card | 17.44% | £872 | 18.9% |
| Santander Business Cashback | 18.9% | £945 | 23.7% |
| Barclaycard Select Cashback | 25.5% | £1,275 | 25.5% |
| Amazon Business Amex | 26.4% | £1,320 | 37.6% |
| Amazon Business Prime Amex | 26.4% | £1,320 | 37.6% |
| BA Amex Accelerating Business | 26.6% | £1,330 | 104.9% |
| Amex Business Gold | 29.1% | £1,455 | not published |
| Amex Business Platinum | 29.1% | £1,455 | not published |
| Moss | must be paid in full | n/a | not published |
Simple interest, balance held flat for twelve months, no fee included. Sources and dates for every rate are on each card in the calculator; the rates alone are on the interest rates page.
How the calculator models it
- If you pay in full, interest is £0 and the ranking is rewards minus fees and FX.
- If you carry a balance, the calculator assumes about one month's spend is carried and charges it at the purchase rate for the year. At £5,000 a month that is the table above, and it usually outweighs every reward on the page.
- It never uses the representative APR for interest. The fee inside that figure is already counted on its own line, so using it would charge the fee twice.
- Pure charge cards are flagged unsuitable for balance carriers, since they cannot carry one. Charge cards with an opt-in pay-over-time facility are modelled at that facility's rate.
- A missing purchase rate is flagged, not treated as free. A card with no published rate would otherwise win the carry-a-balance ranking on the strength of a blank.
- Simplifications: the balance is held flat, interest is simple rather than compounded, and cash withdrawals and late-payment fees are not modelled. Each of these makes the real cost slightly higher than shown, never lower.
Common questions
Is interest charged if I pay the statement in full?
No. Every credit card here gives an interest-free period on purchases, typically up to 56 days, as long as the full statement balance is paid by the due date. Pay in full every month and the purchase rate never applies. Cash withdrawals are the exception: they usually attract interest from the day of withdrawal, and a fee.
What happens if I pay most of the statement but not all of it?
You lose the interest-free period on the whole statement, not just the part you left. Interest is charged from the date of each purchase on the full amount until it is repaid, and the following month's purchases usually attract interest immediately too, until you clear a statement in full again. Paying 'most of it' costs almost as much as paying the minimum.
Why does the representative APR differ from the purchase rate?
The representative APR is a regulated comparison figure: it bundles the annual fee into the cost of borrowing an assumed £1,200 over a year. A card with a large fee shows a representative APR far above its purchase rate. The purchase rate is what is actually applied to a carried balance; the fee is charged once a year whether you borrow or not.
How does the calculator work out interest?
If you say you carry a balance, the calculator assumes about one month's spend is carried and charges it at the card's purchase rate for a year. It never uses the representative APR for that sum, because the fee inside it is already counted separately. Cards that must be paid in full are flagged unsuitable, and a card whose purchase rate is not published is flagged rather than shown as free.
Does interest compound?
Yes. Interest is added to the balance at each statement, and from then on you pay interest on the interest. Over a year the effect on a card in the mid-twenties per cent is a couple of percentage points; the calculator uses the simple figure, balance times rate, which slightly understates the true cost of a balance carried all year.