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Interest rate is the percentage of additional cost added to your balance. Essentially you are paying for the extra time to use that money.
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It is based on how much of a cap you have on your credit card, the bank you're lending from, the type of credit card, and your credit score.
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Anytime you are borrowing money (using a credit card, taking out a loan, etc) there will usually be an interest rate.
Example:
For example, if you borrow $5,000 at a simple interest rate of 3% per year, and you have it for 5 years, you'll pay a total of around $790 in interest.