Credit card interest occurs when a user doesn’t pay their card’s monthly balance in full. The amount you pay on top of each dollar that remains unpaid is considered a card’s “interest rate.” This amount must be stated in the terms and conditions of a card’s application so that you have the information readily available.
To calculate the dollar amount you’ll pay in interest for any given month, follow these steps (which we expand on below):
- Find your average daily rate
- Find your average daily balance
- Multiply your answers from step 1 and step 2
- Take this number and multiply it by the number of days in the billing cycle
Follow along below to dive into a detailed look at how credit card interest works.
What Is Credit Card Interest?
Credit card interest is the amount you’ll pay if a balance isn’t paid off by the due date. This is … Read the rest