Cashback credit card interest rates explained

Interest rates on credit cards can feel like a lot to unpack, especially when cashback rewards are added to the mix. In fact, ‘what is an interest rate’ is one of Australia’s most searched finance terms, clocking around 1,600 searches every month. That’s why understanding how interest works on a credit card with cashback rewards is one of the most important things you can do before you apply.

Like any credit product, knowing what rates are charged, when they kick in, and how to avoid them altogether helps you get real value from your cashback credit card.

At MONEYME, we believe that financial literacy leads to good money decisions. Here’s everything you need to know about cashback credit card interest rates.

What is a cashback credit card interest rate?

A cashback credit card's interest rate is the annual percentage rate charged on any unpaid card balance. For example, if you have a credit card limit of $20,000 and you’ve only paid off $8,000 by the due date, interest will be charged on the remaining $12,000 balance.

If you pay your card balance in full each month within the interest-free period, you won't pay any interest at all. If you don't pay it off in full, interest is calculated on the remaining balance and added to what you owe. 

Rates are personalised based on your credit score, so the rate you receive may differ from the lowest advertised rate. Checking your personalised rate before you commit is always a good first step. 

Is the interest rate on a cashback credit card different from a standard credit card?

No. A cashback credit card is simply a regular credit card that also offers a cashback reward. The interest rate works exactly as it would on any other credit card: it’s charged on any outstanding balance that carries past the due date, and is determined by the lender and your individual credit profile.

Your credit score is one of the main factors lenders use to assess risk. A stronger credit history can work in your favour when it comes to securing a lower interest rate.

Common misconceptions on cashback credit cards

There are some common questions we hear at MONEYME about interest rates and credit card cashback. Let’s clear a few of them up.

Cashback cards always have high interest rates

Not always. Rates are personalised based on your individual credit profile. With MONEYME, you can check your rate before you apply without it affecting your credit score.

The interest-free period applies to all transactions

No. The interest-free period covers everyday purchases only. Cash advances and transfers attract higher interest rates and fees from the moment they are made. There is no interest-free period on these transactions.

Only one interest rate applies to everything on my card

No. There are two rates to be aware of on your cashback credit card: the purchase rate on everyday spending and the cash advance rate, which is higher and kicks in immediately on ATM withdrawals and bank transfers. Knowing the difference between these rates will help you avoid any unexpected charges.

Cashback credit cards charge higher rates than regular credit cards

A credit card that offers cashback is a standard credit card with a rewards feature built in. Your rate is determined by the lender and your credit profile, not by the cashback feature itself. 

What to be aware of before applying for a cashback credit card

Here are a few things worth knowing before you apply:

Interest rates are personalised based on factors like your credit score and financial history. The advertised rate may not be the rate you receive. Always check your personalised rate before you apply.

The interest-free period has conditions. To avoid paying interest on your card, pay your closing balance in full by the due date each statement period. Late payment fees may apply if your payment is overdue.

Not all purchases are eligible for cashback. Cashback credit cards typically exclude certain transaction types such as cash advances, balance transfers, and some bill payments. Check the terms and conditions before you apply.

Cash advance rates are higher and apply immediately. Using your cashback credit card to withdraw cash or transfer funds to a bank account attracts a separate, higher interest rate with no interest-free period.

Cashback is an extra benefit and has no impact on the interest rate you pay. If you have an outstanding balance past the due date, the cashback you receive (if any) isn’t applied to the interest charged. It’s automatically credited to your account, as long as you paid the minimum repayment amount by the due date.

Foreign transaction fees apply to overseas transactions. Using your card overseas or making purchases in a foreign currency will attract a currency conversion fee on top of the exchange rate charged by the lender.

Is a cashback credit card right for you

Now that you understand how interest rates work on a cashback credit card, the next question is whether the product is right for you.

A cashback rewards credit card is a great fit for you if you:

Pay your card balance in full every month

Want a straightforward system of rewards credited in dollars, not points, straight onto your card

Prefer a quick approval and a digital-first card and app you can access from your phone

Value built-in protections for your phone, purchases, and events

 The MONEYME Cashback Rewards Credit Card

If that sounds like you, here’s what the MONEYME Cashback Rewards Credit Card offers. It’s designed for everyday spending, with 1% cashback on eligible purchases and no complicated points to track.

Cashback

1% cashback on eligible everyday purchases (groceries, transport, coffee, and more)

Credited monthly when you make your minimum repayment on time

Cashback is capped at 1% of your credit limit each month

No expiry on cashback earned

Interest-free period

Up to 44 days interest-free on everyday purchases when you pay your closing balance in full by the due date

Credit limit

$1,000 to $20,000 (subject to eligibility)

Interest rates

Purchase rate: 19.99% p.a. to 26.99% p.a. (personalised based on your Equifax credit score)

Cash advance rate: 22.99% p.a. to 29.99% p.a. (applies immediately, no interest-free period)

Fees

Annual fee: $149

Cash advance fee: 3% of the transaction value

Foreign currency conversion fee: 3% of the transaction value (plus the prevailing Mastercard exchange rate)

Late payment fee: $35 (charged when a repayment is seven days overdue, and again every 14 days until arrears are cleared, up to a cap of $210)

Disputed transaction fee: $11 (charged if a disputed transaction is investigated and found to be valid)

Built-in protections (when you pay in full using the card)

Mobile phone insurance: up to $1,500 per year (maximum $900 each claim) for damage and theft. See full terms and conditions here.

Purchase protection: up to $750 per year for eligible non-delivery, damaged or missing items, plus accidental damage or theft for in-store purchases. See full terms and conditions here.

Event ticket cover: up to $1,200 per year if you can't attend an event due to illness or unexpected circumstances. See full terms and conditions here.

Ready to get your cashback credit card?

Check your personalised rate and credit limit before you apply, with no impact on your credit score. Approval decisions are made in as little as 60 minutes, and once approved, you can add your digital card to your Apple or Google wallet for immediate access.

Explore the MONEYME Cashback Credit Card.