How Credit Card Interest Works

Credit card interest is one of the silent killers of your financial health. Let’s break down how it works and why it’s critical to understand.”
“Credit card companies typically charge an Annual Percentage Rate, or APR, on any balance you carry over from month to month. If your APR is 20%, that means you’re being charged 20% on the balance remaining after your payment.”
“For example, on a $1,000 balance, you’d pay about $167 in interest over the course of a year. That’s $167 you could be using to pay down your debt faster! The longer you carry a balance, the more you’ll pay in interest.”
“The best way to avoid this? Pay your balance in full each month. If that’s not possible, focus on paying down the highest-interest debt first to minimize the interest you accrue.”