How Credit Card Interest Works (How To Calculate)
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We discuss how credit card interest works. We go through the basics of credit cards and how the interest rate (otherwise known as APR, or annual percentage rate) works. The short story is that you have several inputs for calculating your interest. You need to have your average daily balance, interest rate (or APR), compounding period (most likely 365 or 360), number of days in a billing cycle. You figure out your periodic rate by taking your interest rate and dividing it by your compounding period. You take your periodic rate and multiply it by your average daily balance and number of days in the billing cycle to calculate your interest that month. Credit cards also have multiple different APRs. They have normal purchase APR, balance transfer APR, cash advance APR, and penalty APR. How Credit Card Interest Works (How To Calculate)
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▮▮▮▮ TIMESTAMPS
• 0:00 – Intro
• 0:41 – Elements of credit card interest
• 1:41 – Calculating credit card interest
• 2:36 – Types of APRs
• 5:11 – Outro
