What is a credit card?
With a debit card you spend money from your own account. With a credit card you spend the bank’s money, up to a set limit (the credit limit). Each month the bank sends a bill, or statement, and you must pay it by a set date (the due date).
Pay the full bill by the due date and there is usually no interest on purchases. But leave part of the bill unpaid and interest starts on the balance, and the next month interest is charged on that interest too. The card then turns from a convenience into a loan.
Say Mitu spends Tk 30,000 on her card before Eid. When the bill comes she pays it all, so there is no interest; she has used the money for a month at no cost. Her friend Ruma spends the same but pays only the minimum. Interest keeps running on the rest, and by the next Eid she is still paying off the last one. The story is made up.
Why it matters to an investor
- To compare rates: interest on a card balance is usually far above the expected return on any saving or investment. Carrying a balance while investing means borrowing dear to earn cheap.
- To see compounding in reverse: compounding works for you in savings, and against you in exactly the same way on a card balance.
- To protect your credit record: unpaid bills are reported to Bangladesh Bank’s Credit Information Bureau (CIB), which can make later loans harder to get.
- To keep spending in check: card spending does not feel like money leaving your hand, so budgets break easily.
Bills, due dates and the minimum payment
Each month a statement is produced on a fixed day, and the due date follows some days later. The time from a purchase to the due date is the interest-free period; depending on when you buy, it is usually from a few weeks to about a month and a half, and differs between banks.
The statement shows a “minimum payment”, a small part of the bill. Paying it avoids a late fee and keeps the card active, but interest keeps running on the rest. The minimum payment does not settle the bill; it only avoids default.
Bangladesh Bank’s rules
Bangladesh Bank first capped card interest in 2020, at 20% a year; from January 2025 the maximum is 25%. Each bank sets its own rate within the cap. The new credit card guidelines of March 2026 add further rules, listed below. The rules can change over time.
- Interest is charged only on the unpaid balance, not on the whole bill.
- Cash withdrawals are allowed up to 50% of the limit, with no interest-free period; interest runs from the day of withdrawal.
- A late fee can be charged only once per billing cycle. Banks must give 30 days’ notice before changing interest rates or charges.
- To get a card you must be at least 18, have an e-TIN and a clean CIB report. The maximum limit without collateral is Tk 20 lakh.
- Harassment or threats during recovery are banned, and contact must be within office hours.
Where the costs hide
- Annual fee: many cards charge one every year, sometimes waived if you spend a set amount.
- Cash withdrawal fee: a separate fee on top of the interest.
- “0% instalment” (EMI) offers: the interest may show as zero, but a processing fee or a higher product price can hide the cost.
- Foreign-currency spending: exchange-rate markups and separate charges.
Worked example
- Say you owe Tk 50,000 on a card at 25% a year, about 2.08% a month. The first month’s interest alone is about Tk 1,040.
- You pay Tk 2,500 a month and spend nothing new. In the first month, about Tk 1,040 of the Tk 2,500 goes on interest, and the balance falls by only about Tk 1,460.
- At this pace it takes about 27 months to clear, and you pay about Tk 15,300 in interest in total.
Result: Tk 50,000 of shopping ends up costing about Tk 65,300, spread over more than two years. Fees and VAT can push it higher. The numbers are only an example.
Months
See the numbers as a table
| Balance owed | |
|---|---|
| 0 | Tk 50,000 |
| 1 | Tk 48,542 |
| 2 | Tk 47,053 |
| 3 | Tk 45,533 |
| 4 | Tk 43,982 |
| 5 | Tk 42,398 |
| 6 | Tk 40,781 |
| 7 | Tk 39,131 |
| 8 | Tk 37,446 |
| 9 | Tk 35,726 |
| 10 | Tk 33,971 |
| 11 | Tk 32,178 |
| 12 | Tk 30,349 |
| 13 | Tk 28,481 |
| 14 | Tk 26,574 |
| 15 | Tk 24,628 |
| 16 | Tk 22,641 |
| 17 | Tk 20,613 |
| 18 | Tk 18,542 |
| 19 | Tk 16,429 |
| 20 | Tk 14,271 |
| 21 | Tk 12,068 |
| 22 | Tk 9,820 |
| 23 | Tk 7,524 |
| 24 | Tk 5,181 |
| 25 | Tk 2,789 |
| 26 | Tk 347 |
| 27 | Tk 0 |
Common mistakes
- Thinking that paying the minimum means the bill is paid.
- Treating the credit limit as your own money or extra income.
- Withdrawing cash on the card, which costs interest and fees from day one.
- Seeing “0% instalments” and not checking the fees or the product’s real price.
A credit card is nearly free only when the full bill is paid on time every month. Leave a balance and it becomes an expensive loan.