APR Example
Scenario:
• Credit Card APR: 18%
• Balance: $1,000
• Minimum Payment: $50 per month
How APR Works:
1. Monthly Interest Rate: APR is typically expressed as an annual rate, but credit card companies usually calculate interest monthly. To find the monthly interest rate, you divide the APR by 12 (the number of months in a year).
monthly interest rate = 18%/12 =0.015 = 1.5%
2. Interest on Unpaid Balance: If you carry a balance of $1,000 from month to month, interest is charged on that balance.
So, in the first month, if you carry the $1,000 balance without paying it off, you’ll be charged $15 interest
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CURATED FROM
Credit Card 101: Understanding Interest Rates, Fees, and Terms- Your Ultimate Guide to Responsible Credit Card Usage
fundsamentally.com
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IDEAS CURATED BY
Solopreneur | Finance | Lifestyle "He reached for the sun, and found his wings were made for such heights." -ChatGPT
Credit cards have become an integral part of our financial lives, offering convenience and purchasing power at our fingertips. However, navigating the world of credit cards can be daunting, especially when it comes to deciphering interest rates, fees, and complex terms.
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