Credit card interest is usually charged daily on your balance, and added monthly. When rates are high, a big share of each payment goes to interest instead of the balance.
The basics
- APR is the yearly rate; the daily rate is roughly APR divided by 365
- Pay the full statement balance by the due date and you usually pay no interest on purchases
- Carry a balance and interest is charged on it, often including new purchases
- Cash advances often have higher rates, fees and no grace period
Example
A $3,000 balance at 24% APR builds up about $60 of interest in a month. A $90 payment only reduces the balance by about $30.
General educational information, not financial or legal advice. Nickel Keepers isn't paid by any lender, card company or debt relief company.