Banks earn most from revolving balances — interest that accrues every day you don't pay in full. Here's the math they don't put on the front of the offer.
The same APR can produce different charges depending on the method. The friendliest is the adjusted balance; the harshest is barred by law.
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Buy me a coffee ☕Most cards use the average daily balance method: they average your balance across each day of the billing cycle and apply your APR. Many compound it daily, so each day's interest is charged on a slightly larger amount.
A minimum payment is often only about 1% of your balance plus that month's interest, so most of it goes to interest and the balance barely falls. That can stretch payoff to decades. Paying a fixed higher amount clears the debt far faster and cheaper.
APR is the annual percentage rate — the yearly cost of borrowing on the card. Divide it by 12 for a rough monthly rate, or by 365 for the daily rate most cards actually use.
Yes. If you pay your full statement balance by the due date each month, the grace period means you are not charged interest on new purchases.