How credit card interest actually works
Why a $2,000 balance can cost far more than $2,000 — and how to avoid it entirely.
Credit card interest is charged on your average daily balance, compounding roughly daily. A 24% APR is about 0.066% per day applied to whatever you owe.
The grace period
If you pay your statement balance in full by the due date, most cards charge no interest at all on purchases. Carry any balance and the grace period usually disappears until you're back to zero.
Minimum payments are a trap by design
A minimum is often 1–3% of the balance. Paying only that on a high-APR card can stretch a modest balance across a decade and more than double what you pay.
One habit fixes most of it
Pay the full statement balance every month. If you can't yet, pay the highest fixed amount you can afford and keep it the same every month, even as the minimum drops.
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