Can someone help me understand APR and credit cards with my personal example?

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I’ve gotten a mixed of information among friends, and internet. I was hoping to solidify understanding using my current credit card balance as an example. So as long as I pay the minimum I will not have to pay interest? If I do have to pay interest would I be paying 29.99%/12 for however much I owe by the end of the month? Or does it accumulate and charge me at the end of the year?

Current Balance: $2161

Remaining Statement Balance: $0

Next Closing Date April 9th

Payment due: $0

Purchase APR: 27.49%

Cash advance APR: 29.99%

In: Economics

5 Answers

Anonymous 0 Comments

If you only pay the minimum, you will be paying interest..

Credit card interest is often calculated on a daily basis and charged once a month

Anonymous 0 Comments

You have to pay the statement balance to avoid interest. If you pay the minimum you will be paying interest. It’s typically calculated using average daily balance. They look at your average balance for that day, calculate the interest for that day, and at the end of the month it’s added to your total.

Anonymous 0 Comments

Interest is calculated daily, charged monthly. Any balance that you don’t pay off that month is subject to that interest.

If you paid just the minimum (lets say thats $25) this month, next month you’ll see an extra $48~ added to your balance in interest fees.

Anonymous 0 Comments

Your lender will give you a statement balance and a minimum payment. If you pay the full statement balance, you won’t be charged interest. If you pay just the minimum (or anything less than the full balance), you’ll be charged interest.

If you don’t pay the minimum balance at all, you’ll have a missed payment and will be further penalized for that, on top of the interest you have already accrued.

Anonymous 0 Comments

It depends on whether the credit card company has some sort of deferred interest deal but the situation you described sounds like the usual run-of-the-mill situation. For those, you will be making some small payment (if you’re just paying the minimum) and the interest will end up being way more than the principal by the time you pay it off.

Sometimes there are deferred interest deals where, as long as you get the entire balance paid off by the end of the deferred period, you get away with not paying any interest. These deals often have a bunch of fine print that you need to pay attention to. Otherwise they hit you with all of the interest that was deferred.