What is a credit card’s “rate of interest” anyway?
A charge card essentially provides you a brief loan for the month. You don’t pay for the loan– it’s an interest-free loan if you pay it off entirely during that month-to-month duration.
But if you don’t pay off the loan in its whole– let’s say you invest $1,000 on your charge card, however, can only pay off $500 that month– then you have a balance on your card.
Your credit card balance is exactly what the interest is charged on; usually, it’s someplace around 20%. In this case, you ‘d be charged $8.33 that month ($ 500 balance * 20% interest)/ (12 months). Continue reading →