The true cost of credit: how “0%” and “low rates” turn into 50-80% a year

Nominal rate vs real rate: what's the difference

The nominal rate is the interest charged on the outstanding balance. It is what ads usually show in large print. But on top of interest a loan can cost fees: for issuing the loan, a monthly service fee, account fees, or insurance offered together with the loan.

The real annual interest rate (in Ukrainian, РРПС, similar to an APR) is all your loan costs expressed as an annual percentage of the loan amount. It takes into account not only the total of all payments but also when you make them. That makes it the only figure that fairly compares loans with different payment structures.

“0%” instalments: where the overpayment hides

A shop and a bank offer you a UAH 20,000 phone “in instalments at 0%” over 10 months. There really is no interest, but there is a monthly fee of 2.9% of the purchase amount.

Why so high, if 2.9% a month is “only” 34.8% a year? Because the fee is charged on the original amount for the whole term, even though the debt shrinks every month. In the last month you owe just UAH 2,000, yet the fee is still UAH 580, that is 29% of the balance for that month. A fee charged on the original amount roughly doubles the real rate compared with how it looks at first glance.

A loan “at 9.9%”: what fees change

Another typical offer: a UAH 50,000 cash loan for 2 years “at 9.9% a year”. Without fees this really is cheap: an annuity payment of UAH 2,304.94, total interest of UAH 5,318.54 over two years, a real annual rate of about 10.4%. But let's look at the terms with fees.

Same nominal rate, but five times the real cost. That is why two loans “at 9.9%” at different banks can differ by tens of thousands of hryvnias. How an annuity payment is calculated and how it differs from equal principal payments is explained in “Annuity or equal principal payments”. The loan calculator shows the payment and interest at your rate; add fees to the payment separately.

Credit cards and the grace period

A credit card with a grace period can be free if you repay the whole debt before the grace period ends. Problems start when you pay only the minimum: then interest at the card's regular rate is charged on the balance.

Before you take a card, check how long the grace period is, which transactions it covers (cash withdrawals and transfers are often excluded), and whether there are fees for card maintenance and cash withdrawals.

Online microloans: what limits apply

The most expensive loans are short online “payday” loans. Law No. 3498-IX capped their cost in stages: since 21 August 2024 the maximum daily interest rate on a consumer loan is 1% a day, and it must include all costs: interest, fees and additional payments. You are not obliged to pay anything that is not in the contract or the cost calculation.

• The term cannot be extended unilaterally, only by an additional agreement with the consent of both parties.
• Fines and late fees are capped by law: for loans above one minimum wage (UAH 8,647), their total cannot exceed half of the amount received; for smaller loans, twice the amount received.
• Interest after the term ends. According to the Grand Chamber of the Supreme Court, contractual interest accrues only within the loan term. After that, the lender can claim 3% a year plus inflation losses, unless the contract provides otherwise.

If “collectors” call demanding repayment of a loan you never took, it may be fraud: someone may have taken out a loan in your name. What to do if fraudsters got access to your details or money is covered in “Fraudsters took money from my card”.

How to compare two loans in 2 minutes

1. Ask both lenders for the consumer credit passport. It must be provided before you sign the contract.
2. Find two lines: the real annual interest rate and the total cost of credit (the sum of all payments). You can ignore the nominal rate for now.
3. Compare at the same amount and term. The loan with the lower real rate and total cost is the better deal.
4. Check what you actually receive. If a fee is deducted from the amount, you get less than you will owe.
5. Look at optional services. Insurance or a “service package” may be voluntary. If you can decline them, calculate the loan without them.
6. Check the early repayment terms. If you plan to repay early, find out how interest is recalculated and whether there are extra charges.

When credit is especially expensive

The cost of new loans also depends on the NBU key rate. From 30 October 2026 it is 16.5%, and banks build the higher cost of money into rates on new loans. How the NBU's decision affects your loan and deposit is explained in our article on the key policy rate. The cheapest loan is the one you avoid: a small cash reserve in a separate account often replaces a “payday” loan.

In short

• The true price of a loan is shown by the real annual interest rate, not the advertised rate.
• A “0%” instalment plan with a 2.9% monthly fee costs 77.9% a year; a loan “at 9.9%” with fees, 56.6%.
• A fee on the original amount roughly doubles the real rate, because it is charged on a debt that has already shrunk.
• The lender must provide the real annual rate, the total cost and the payment schedule before you sign.
• The maximum daily rate on consumer loans is 1% a day, penalties are capped, and the term cannot be extended without your consent.
• Compare loans by the real annual rate and total cost at the same amount and term.

Figures in this article

• Minimum wageUAH 8,647/mo
  from January 1, 2026
• NBU key policy rate16.5%
  from October 30, 2026
• Maximum daily rate on a consumer loan1%
  from 21 August 2024, per day

Figures checked against official sources on October 29, 2026. If a figure changes, we update the article and its update date changes automatically.

Sources

1. Debet-Kredyt - definition of the real annual interest rate under the Consumer Credit Law (in Ukrainian)
2. Debet-Kredyt - NBU rules on calculating the total cost of credit and the real annual rate (Resolution No. 16 of 11.02.2021) (in Ukrainian)
3. Bankrate - the 1% daily rate cap and limits on penalties for consumer loans (Laws No. 1734-VIII and No. 3498-IX) (in Ukrainian)
4. LIGA:ZAKON - the law capping microloan rates at 1% a day has taken effect (in Ukrainian)
5. Finance.ua - new microloan rules: no unilateral extension of the term (in Ukrainian)

The examples in this article are illustrative and show how the calculation works. Actual loan terms depend on the bank or finance company. This article is not financial or legal advice.