People often use cost and fee loosely, but on a credit facility the two behave differently. Understanding the distinction helps you read your statement and your agreement accurately.
Interest, or the charge for credit
This is the ongoing cost of having borrowed money. It accrues over time, in relation to your outstanding balance and the basis in your agreement. It is the main cost of the facility and it continues for as long as a balance is outstanding.
Fees
A fee is a specific charge tied to an event or a service rather than to the passage of time. Examples include a set-up cost when the facility is established, or a conditional charge that only arises if something happens, such as late payment.
How to tell them apart on your statement
- Interest or credit charges recur period after period while a balance exists.
- Fees appear as one-off lines tied to the event that caused them.
- Both are defined in your agreement, so each line can be traced back to a clause.
Why we keep it figure-free here
Your actual interest and any fees depend on your product, term and offer, so your agreement and statement are the accurate source. This is exempt business lending to your company, with no director guarantee, and the Financial Ombudsman Service does not apply — so we explain any line directly if you ask.
See also: Can my rate or charges change during the term?, How are my payments allocated to what I owe?, Are there fees for paying off my facility early?.