An introduction to Credit Cards

What’s a credit card?

Think of a credit card as your flexible spending companion. It's a plastic (or sometimes metal) card issued by a bank or financial institution that lets you borrow money to make purchases, up to a certain limit.

Unlike a debit card, which pulls cash directly from your bank account, a credit card gives you a line of credit. So, every time you tap, swipe, or enter your card details, you're essentially borrowing money. You'll need to pay this borrowed amount back, usually with some interest and fees, unless you pay your balance back in full at the end of your billing cycle (more on that further down).

How does a credit card‌ work?

• You spend: when you buy something, the credit card provider pays the merchant, and that amount gets added to your card's balance

• Your statement arrives: your card activity is tracked over a "billing cycle" (a month). At the end of it, you'll get a statement showing what you've spent, any payments you've made, and what you still owe

• The grace period: most cards give you an "interest-free grace period" on new purchases — typically up to your payment due date. If you pay your entire balance by the due date on your statement, you won't pay any interest on those new purchases. That means you can borrow money in the short-term, interest-free
  
  For Revolut Credit Cards you have from the date of purchase until the due date on your next statement to repay your balance and avoid paying interest. This can be up to 62 days, depending on what time of the month you make the purchase. Note, this does not apply for cash advances.

• Interest kicks in (if you don't pay in full): if you don't clear your balance by the due date, interest that's accrued since the date of the purchase is applied. This interest is often calculated daily and then applied and charged to the statement on the 1st of the month if the bill isn't paid in full
  
• Minimum payment:
you'll always have a "minimum payment" due. Make sure you pay at least this amount by the deadline to avoid late fees and impacting your credit rating. But note, only paying the minimum can mean you pay a lot more in interest over time

• Cash advances: need cash from your credit card? No problem. With a Revolut credit card, you can withdraw cash at an APR of 19.99%.¹ Note, the interest-free grace period doesn’t apply to cash advances, so you’ll start paying interest on cash immediately.This feature also carries a cash advancement fee. Both the interest charged and the cash advancement fee will show up on your monthly statement

What's an interest rate?

Simply put, the interest rate is the price you pay to borrow money. For credit cards, that interest is typically calculated daily and then applied to your monthly statement.

Interest rate vs. APR: what's the difference?

You're probably used to seeing "APR" on credit card offers. But what's the actual difference from just a standard "interest rate"? Let's clear that up.

The interest rate (nominal interest): think of the interest rate as the fundamental cost a credit card company charges you for letting you use their money. It's that percentage that gets tacked onto your balance if you don't pay your bill in full.

The APR: it stands for Annual Percentage Rate and it’s the official, standardised way that all lenders have to tell you the yearly cost of borrowing. It's designed to give you a clear, comprehensive picture of the cost of borrowing, including any fixed fees associated with your credit card. It's meant to be that one number you can use to compare different credit card offers.


The APR generally includes:

• The interest rate (nominal interest): this is the core percentage charged on the money you borrow (your outstanding balance). This is the biggest component of the APR
• Compulsory fees: any other charges that are mandatory for you to have the credit facility. For credit cards in Ireland, the most notable compulsory fee included in the APR calculation is often the annual Government Stamp Duty (€30 per year)

Government Stamp Duty on credit cards in Ireland

In Ireland, there's a specific tax called Government Stamp Duty (GSD) that applies to certain financial cards, including credit cards.

• What is it — it's an annual government levy that you pay for having a credit card account
• How much it is — for credit cards, the stamp duty is currently €30 per year per credit card account
• How is it collected — your bank or credit card provider collects this duty on behalf of the Irish Revenue Commissioners (the tax authority)
• When it's charged — it's typically charged once a year, usually in January, for the preceding tax year. If you close your credit card account mid-year, the stamp duty for that year might be applied at the time of closure

Important note — this charge is per account, not per individual card if you have multiple cards linked to the same account. It also applies if your billing address is in Ireland.

How is my interest calculated?

Your credit card's interest rate is the basic percentage that's charged on the money you've borrowed. If you have an outstanding balance on your credit card, this is the rate that'll be applied to that amount. It's usually calculated daily and added to your monthly statement. It's the straightforward cost of using ‌borrowed money.

For example, let's say you've decided to buy a new gadget for €100 using your credit card. You're planning to pay it back, but you decide to wait until next month's payment due date. If your credit card has a 13.34% nominal interest rate, here's roughly what that decision will cost you over the next 30 days:

• Breaking down the rate — your card's 13.34%¹ nominal interest rate might sound like a lot for a year, but the good news is that you don't need to pay it all in one go. To figure that out, the bank divides the nominal interest rate by 365 days
  
  13.34% nominal interest rate / 365 days = about 0.0365% per day.

• Daily interest on your €100 — each day that your €100 balance sits unpaid, a tiny bit of interest is added
  
  €100 (your balance) × 0.000365 (daily rate) = roughly €0.0365 in interest per day.

• Total interest for the month — since you're carrying that balance for a month (lets assume 30 days for this example), those daily charges add up
  
  €0.0365 (daily interest) × 30 days = about €1.10.

• Your new balance — so, when your next statement arrives, that €100 item isn't just €100 anymore
  
  Original balance (€100) + interest (€1.10) = €101.10.

Overall, it'd cost you €1.10 to borrow €100 for that one month period. If you had paid the €100 back in full at the end of your billing cycle, the cost would have been €0.

What's a credit limit?

The credit limit is the actual cap on your borrowing pool. It's the absolute maximum amount of money you're allowed to owe at any given time on that specific account (like your credit card). Revolut decides this limit after looking at things like your income, how good you are with money (your credit rating), and any other debts you have.

Here’s why it matters:

• Your borrowing ceiling: if you try to spend more than your credit limit, your transaction will usually be declined. It's the line you can't cross
• The bank decides:
the lender, in this case, Revolut, decides this number based on an affordability assessment done at the time of your credit card application

Understanding your credit card statement

Your credit card statement is generated on the first day of each month. It'll show your statement balance, the minimum payment required, and the payment due date, which will be the last day of the month.
Your credit card statement will also detail the transactions you made in the previous month, including any carried-over balances from previous months. Any interest and fees charged during that billing cycle will also be detailed.


Example of how a credit statement operates:

1. Purchases and cash advances made in March would show on your March statement, which would generate on 1 April
2. You'd have until 30 April (the last day of the month) to pay at least the minimum credit card repayment amount due. Remember to pay your balance in full to avoid incurring interest charges on your purchases for that statement cycle
3. On 1 May, any interest due from your March statement is then charged to your card. We'd charge you any interest associated with any cash advances made in March and any carried-over balances or unpaid cash transactions. Any interest associated with your March purchases would also be charged, if you hadn't repaid your credit card balance in full

Additional things to keep in mind

The cost of borrowing: a higher interest rate means you'll pay more for the money you borrow.

Different rates for different things: your card might have different rates for different actions:

• Purchase rate — for your everyday spending
• Balance transfer rate — if you move debt from another card
• Cash advance rate — for cash withdrawals, usually higher and with no grace period
• Introductory/Promo rate — a low (or 0%) rate for a set period when you first get the card, which then reverts to the standard APR

Beat the interest: remember that grace period? All you need to do is pay your statement balance in full every month, and you can effectively use your credit card without paying any interest on new purchases. That's smart money management.

Still have questions? Check out our FAQs here to find out more.

¹ Representative example of a Revolut credit card: assuming a single purchase of €1,500 repaid in equal instalments over a 12 month period, at a variable interest rate of 13.34% Annual Percentage Rate (APR) 17.99%, the total amount repayable (including Government Stamp Duty charge of €30) would be €1,640.58. The total cost of credit would be €110.58.

If you're worried about making payments on any of your Revolut products, we're here to help. Please find more information about financial difficulties for personal credit here.


Revolut Bank UAB is authorised and regulated by the Bank of Lithuania in the Republic of Lithuania, and by the European Central Bank, and is regulated by the Central Bank of Ireland for conduct of business rules.



Lending criteria, as well as T&Cs, apply. Credit cards are available to Revolut customers who are residents of the Republic of Ireland over the age of 18. All credit card applications are subject to approval

WARNING: if you do not meet the repayments on your credit card, your account will go into arrears. This may affect your credit rating, which may limit your ability to access credit, a hire-purchase agreement, a consumer-hire agreement, or a Buy Now Pay Later (BNPL) agreement in the future.