6 October 2023

Credit card interest rates in India, real-life examples and financial implications

Credit cards have become an indispensable part of modern financial life, offering convenience and flexibility but you must understand how the interest rates can affect you by looking at some real-life examples (Photo: Pixabay).

However, they also come with the burden of high-interest rates if not utilized wisely. In India, credit card interest rates may vary, ranging from 24 per cent to 36 per cent annually or even higher.

Understanding credit card payment obligations

In this article, we will look at five real-life scenarios of people paying credit card interest rates in India.

We’ll dive deep into the numbers to understand the interest accrued, equated monthly instalments (EMIs), and other payment obligations, making clear the financial implications.

Example 1 | Kush, the minimum payer

Meet Kush, a 28-year-old marketing executive. He uses a credit card with a 32 per cent annual interest rate having a credit limit of Rs 50,000.

Kush consistently pays only the minimum amount due, which is around 5 per cent of his outstanding balance. In a month, he spends Rs 30,000 using his credit card.

Interest accrued: Kush’s outstanding balance after a month would be Rs 30,000, and he pays Rs 1,500 (5 per cent interest) as the minimum amount due.

The interest accrued in this scenario is approximately Rs 480 per month. So, every month Rs 30,000 + Rs 480 is accrued.

Example 2 | Priyanka, the partial payer

Priyanka, a 25-year-old software engineer, has a credit card with a 28 per cent annual interest rate and a credit limit of Rs 100,000 (Rs 1 lakh).

She pays through her card for most of her regular expenses, including shopping, dining, and paying utility bills, amounting to Rs 60,000 in a month.

Interest accrued: Priyanka pays 20 per cent of her outstanding balance (Rs 60,000) every month, which implies that her interest accrued would be nearly Rs 1,400. So, total accrued in a month is Rs 60,000 + Rs 1,400.

Example 3 | Romita, who carries forward her balance

Romita, a 35-year-old entrepreneur, owns a premium credit card, having a 36 per cent annual interest rate and a credit limit of Rs 200,000 (Rs 2 lakh).

She often carries forward a big balance on his card, averaging nearly Rs 150,000 (Rs 1.5 lakh).

Interest accrued: As a regular revolver, Romita’s interest rate can be very high.

On an average, monthly balance of Rs 150,000 (Rs 1.5 lakh), she may have to shell out a whopping Rs 4,500 in interest alone.

Example 4 | Narad, the responsible credit card spender

Narad, a 30-year-old graphic designer, has a credit card with a 24 per cent annual interest rate and a credit limit of Rs 75,000.

He uses his credit card judiciously and pays the full billing amount every month.

Interest accrued: Narad doesn’t accrue any interest because he pays his credit card bill in full before the due date.

His financial discipline saves him money, which would have otherwise gone towards interest payments.

Example 5 | Raju, the balance transfer beneficiary

Raju, a 40-year-old IT engineer, had accumulated a huge debt on his credit card with a 30 per cent interest rate.

His outstanding balance was Rs 200,000 (Rs 2 lakh).

Realising the burden of high-interest rates, he chose a balance transfer to a new card with an introductory interest rate of 12 per cent for six months.

Interest accrued: By transferring his balance, Raju saved a big amount on interest.

Over six months, his interest cost would be around Rs 12,000 instead of Rs 36,000, because he transferred the balance.


Credit card interest rates in India can be financially burdensome if not managed carefully. The four examples

represent various scenarios showing how interest can accrue based on different usage patterns and payment habits.

So far as credit card interest rates in India are concerned, these real-life examples should give you an idea about the financial implications and help you decide how you want to spend on your card.

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