How Credit Cards Charge Interest! (The Basics)
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- เผยแพร่เมื่อ 11 ก.ย. 2024
- Credit card interest explained
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How does credit card interest work? It can be confusing to understand, but I'll explain the basic math so you can get an idea of how much you'll be paying in interest. This video will explain the average daily balance method in the simplest form ( so it's not 100% accurate), but it'll at least give you a general idea of how the math works. Credit cards can be extremally expensive, so always try and pay off the statement balance in full by the due date each month and you'll never need to worry about paying any interest.
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Enjoy! Comment below if you have any questions
Thanks
You’re welcome
@@HonestFinanceif you max out your card on one purchase and dont use the card until its paid in full, and that would take you the next 5yrs and 6months or sooner, will the credit card company (give you more rope to hang yourself) funds to have fun, or decrease your limit?
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This answered my question of why the Balance subject to interest was more than the previous statement balance. This is the most thorough explanation of how credit cards work. Thank you.
I really needed this detailed breakdown, i have a business strategy using my business credit cards limit, which i would payback in full plus intrest for the next 5yrs and 6 months, yes its expensive but its access to funds to make funds that i would try and payback sooner than later.
BX STAND UP!!!
Thank you! This was very useful. Looking at my past statements, I am not understanding why I paid no interest in July and August but started paying interest in September even though I had paid the previous balance in full and in time. Why could that be? I called the credit card company but their explanation made no sense to me
Wow you give really good explanation on how interest work for credit cards! But does interest begin accumulated not only depend on what you spend during the grace period but also purchases made on next billing cycle as well? And when does companies stop charging interest on you? 🧐
Great finance videos. Subscribed🎉🎉
OK so i have a credit card balance of $17,000 with 22.24% interest rate and i can pay this off buy selling my Honda HRV with 25,000 miles on it to carvana which they will pay me $18,000 for it. Now on the other hand I can buy a new Tesla model Y which they are running a promo of 0.99% APR for 60 months. Vehicle amount is $42,990/destination fee 1,390 / order fee $250/minus instant federal tax credit of $ 7,500 for this EV car . Total of $37,130 plus tax and other misc small charge. My question is. Will i get big savings out of it if when doing this since the car has a very low interest. Thank you. Need your answer asap please.
Reply
So the new Amazon prime card has a review that points out that if balance isn’t paid in then you got charged interest on all new charges. Is this typical to all credit cards then it seems?
Isn't your ADB example incorrect?
6:29
You are saying that for a balance of $36,000, you will pay $19.20 in interest for that month's cycle... that doesn't make sense. You pay $19.20 PER DAY. The monthly interest is closer to $580...
He didn't say the balance was $36,000 he said if you add up the balance every day for 30 days it equals 36,000 so the persons balance was actually around $1200.00. The reason I say around is because the person might have paid into the account or added a charge and then the addition would be different. It is the average balance that they take interest on not the exact amount. So the person pays $19.20 interest on a balance of $1200.00. That makes sense.
Does paying interest go towards my unpaid balance
I see no one answered you that answer is no. That is the cost you pay to the credit card company or bank to borrow the money from them. To pay down the balance you have to pay more than the interest for that month.