Credit card interest is what makes carrying a balance so costly. Understanding how it's charged is the first step to paying less of it.
APR and the daily rate
Your card has an APR (annual percentage rate). Card issuers divide it by 365 to get a daily rate, then apply it to your balance each day. That's why interest compounds — you pay interest on yesterday's interest.
The grace period
If you pay your statement balance in full every month, most cards charge no interest at all thanks to the grace period. Interest only kicks in once you carry a balance.
Why balances feel stuck
On a $6,000 balance at 22% APR, roughly $110 of interest is added the first month. If you pay $150, only about $40 reduces the balance. Use the calculator to see how paying more changes that.
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