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How your interest rate is calculated, and what to expect with a variable interest rate.
Overview
This article explains how the variable APR on your Capital on Tap Business Credit Card is calculated, and answers common questions about the change to variable rates. This doesn't apply to your Capital on Tap Instant Savings account, which has a separate variable rate.
How your variable interest rate is calculated
In February 2023, we changed how interest rates are calculated for all new customers and eligible existing customers, switching from a fixed interest rate to a variable interest rate.
Your variable interest rate is made up of two parts: your fixed business rate, plus a variable portion that tracks the Bank of England base rate. Your rate can only change at the start of a new billing period. We use the base rate published at the start of your billing period for the calculation.
What is the Bank of England base rate, and how is it set?
The Bank of England base rate is the interest rate the Bank of England charges other banks to borrow money. The Bank of England reviews, and may change, this rate 8 times a year, although it can do so more frequently in exceptional circumstances, based on the country's financial situation.
What is the current Bank of England base rate?
You can find the current base rate on the Bank of England's website.
Can my rate go down as well as up?
Yes. If the base rate decreases, this saving will be passed on to you from the first billing period that starts after the new rate becomes effective. We will never pass on a negative base rate — if it goes negative, we'll pass on a rate of 0%.
How soon after a base rate change will my interest rate change?
Whether the base rate goes up or down, the change applies from the first day of your billing period that starts directly after the new rate becomes effective.
For example, when the base rate changed on 2 February 2023, customers with billing periods starting on 3 February 2023 had the new variable rate applied from that billing period.
What is the difference between my Card Variable Rate and Cash Variable Rate?
Your Card Variable Rate applies to card purchases. As always, if you pay your balance in full at the end of each billing period, you will not be charged any interest on your card purchases.
Your Cash Variable Rate applies to cash drawdowns and ATM withdrawals.