Interest on your account (UK Only)
How interest is calculated and applied to your Capital on Tap account.
Overview
This article will help you understand how interest is applied to your Capital on Tap account. It covers how different transactions are treated and answers common questions about interest charges.
How interest is calculated and applied
- Card purchases and Bill Pay payments: Interest on your account is calculated daily. If you do not pay your full outstanding balance by the payment due date, interest is charged on your card purchases from the date each purchase was debited from your account.
- ATM withdrawals and Drawdowns: Interest will always be applied daily on ATM withdrawals and Drawdowns until the funds have been paid back in full.
Your monthly statement will show interest as either an 'Interest Charge' or a 'Card Interest Charge'.
- An Interest Charge includes interest on drawdowns, card purchases, and ATM withdrawals. This charge is applied on the last day of the billing period for the current period's interest.
- A Card Interest Charge is the interest for card purchases. This charge appears on your statement on the business day after the payment due date if the full balance from the previous billing period was not paid.
FAQs
What is the interest-free period?
You can receive up to 42 days interest-free on card transactions if you pay the full outstanding balance by your payment due date. This period runs from the first day of your billing period until your payment due date. The 42 days refers to the maximum time between when your billing period starts and your payment due date.
Important: ATM withdrawals and drawdowns will always incur interest.
What happens if I pay my balance partially?
If you pay your balance partially, you will be charged interest on your card purchases from the date each purchase was debited from your account until you next pay your outstanding balance in full. To avoid interest charges, you must pay the full outstanding balance by the payment due date.
Why have I received interest charges?
If your payment option is set to 'fixed' or 'minimum' and you do not pay your outstanding balance in full by the due date, you will be charged interest on your card purchases. This interest is calculated from the date of the purchase until you next pay your outstanding balance in full. If you want to stop incurring interest on card spend, you can change your payment option to 'Full Balance' on the 'Payments' page of your online portal.
If you have made a drawdown or ATM withdrawal, you will accrue interest daily from the date of the withdrawal until the funds are repaid.
Why have I been charged interest twice?
The 'Interest Charge' on your statement is the total interest accumulated throughout the billing period on your daily outstanding balance. This can include interest from both card transactions and ATM withdrawals. The 'Card Interest Charge' is applied the business day after your payment due date if the full outstanding balance from the previous billing period was not cleared. You are not being charged twice for the same billing period; these are two separate charges that appear at different times.
How often will I be charged interest?
The first month you become interest-bearing due to not paying the card spend in full, there are two charges (card finance charge and finance charge).
How do I get interest-free back?
- Pay in full for one billing period
- This only applies to card spend
- ATM Withdrawals and drawdowns will always incur interest
How is my interest calculated?
Interest is calculated daily on your card purchases from the date each purchase was debited from your account. To easily review your interest charges, you can check 'Card Finance Charge' or 'Finance Charge' on your monthly statement.
Where can I find my interest rates?
Your APR can be found on your online portal under Your account > Credit limits and rates. You can also see your interest rate on your monthly statements.
What is my APR?
You can find your APR on your online Portal under Your account > Credit limits and rates. Your current APR can always be found on the Portal, and you can also find your initial APR in your Revolving Credit Facility Agreement that you signed when you first joined.
Why didn't you tell me my APR?
APR could be viewed in your Revolving Credit Facility Agreement that you signed when you first joined, and your current APR can always be found on the Portal. Both of these can be found at any time on your Portal under Your account > Credit limits and rates.
We charge Daily Compounding which changes in accordance with your outstanding balance.
This doesn’t take into account that you can maintain 0% on all card spend, provided payment is made in full by the payment due date.
How do you charge interest? (no drawdown or ATM withdrawal)
All card spend is interest-free if you pay the outstanding balance in full by your payment due date.
The interest-free period runs from the first day of your billing period to your payment due date.
If the balance isn't cleared by the due date, you are charged interest on your card purchases from the date debited from your account until you next pay your outstanding balance in full. This appears on your statement at the end of each billing period as an 'Interest Charge'.
Where was I told there would be interest charged?
Your interest rate can be seen in your monthly statements in bold at the end of every page break. This outlines the interest rate for the account.
Interest Charges are stamped on the end date of your billing period and can be viewed in your “Activity” tab in the customer portal
You can also review the interest rates on your Portal and initially from your Business Credit Card Agreement (the contract):
- Log on to your Capital on Tap Online Portal
- Click on 'Your account’ tab
- Click 'Credit limits and rates'
- Click 'download' next to 'Credit line contract' or view your interest rates below
Upon opening your account we email confirming how interest is calculated. For reference, the subject line is: 'Business funding for the real world. Here's how your account works: You're all set - Here's a quick reminder of how everything works'
It is also stated in Section 4.3 of the contractual agreement that, "Interest will accrue on Cash Withdrawals on a daily basis from the time debited from your account until paid."
What happens when the Bank of England base rate changes?
When the Bank of England base rate changes, it will be applied from the first day of the customer's billing period that starts directly after the new rate becomes effective. If the rate goes down, the savings will be passed on to the customer. If the bank rate becomes negative, we will pass on a bank rate of 0%.
FAQs for variable interest rates
Context for Variable Interest Rates:
What is the Bank of England bank rate and how is it set?
The Bank of England bank rate is the interest rate the Bank of England charges other banks to borrow money.
The Bank of England decides 8 times a year (although in exceptional circumstances it can do so more frequently) if it should change the rate, based on the country’s financial situation.
The bank rate is important because it’s what banks and lenders use to set their own interest rates.
What is the current Bank of England base rate?
Current base rate can be found here How are my rates going to be calculated?
Your rates will be variable: we will add your business rate to the Bank of England base rate to get their overall rate.
This will be calculated for both cash and card.
Can my rates go down as well as up?
Yes. If the Bank of England bank rate goes down this saving will be passed on to the customer from the first billing period that starts after the new Bank of England base rate becomes effective.
Note, if the bank rate becomes negative we will pass on a bank rate of 0%.
How soon after a Bank of England base rate change will my interest rates change?
Whether the Bank of England base rate goes up or down, the change will apply from the first day of your billing period that starts directly after the new Bank of England base rate becomes effective.
E.g. if the Bank of England base rate changes on 2 February 2023, customers that have billing periods starting on 3 February 2023 will have the new variable rate applied for that billing period.
Will Capital on Tap notify me when my rates are going to change?
Yes. We will notify you in your online accounts, and let you know what the interest rates will be in your next billing periods on cash and card if there has been an announcement of a new Bank of England base rate that will be effective before the start of your next billing period.