How much interest do you pay monthly on a credit card?
You Need a Credit Card
The average American owns between three to four credit cards, and there is a good reason for that. Credit cards help you to establish your credit, and when you have good credit, you are able to get loans for large purchases such as cars and houses. Your credit score is also measured when you are looking to rent or own a home.
Credit cards can also ruin your life if you do not know how to use them correctly. Misused credit cards can accumulate expenses if you don’t watch them closely. Apart from that, the interest that accumulates on your credit card can be horrendous if you let it get out of control.
Why The Interest?
Credit card companies may charge you interest for a variety of reasons. If you do not pay off your credit card balance in full by the time the statement balance is due, you will get charged APR(annual percentage rate). Credit cards charge you different fees because they are loaning you money. There are hardly any loans out there that you can receive without paying some type of fee; credit cards are no exception.
What Type of Fees do Credit Cards Charge?
There are different types of APRs that your credit card company can charge you. There is an introductory interest rate that your credit card may give you for a specific amount of time. Sometimes that rate can be low or it can be 0%. After the introductory time has elapsed, you will begin to get charged the standard rate.
There is also an APR that is charged for purchases. This is when you make a purchase and do not pay it off by the end of the month. You can get charged a fee for balance transfers as well. Whenever you transfer a balance from one card to another, you will get charged this fee.
Apart from that, you can get an APR fee for a penalty. This typically occurs when you do not pay your credit card bill on time. Unfortunately, you can be tacked with more than one of these APRs in one month if you do not pay attention to your balances and pay off your credit card. You want to calculate monthly credit card interest. You may be getting tacked with more interest than you think, so you do well to watch your credit card statements carefully.
How To Get The Best Rates
When you apply for a credit card, the credit card issuer will make a credit inquiry. This means that your credit report will be pulled, and they will see your credit score and your payment history. The best way to get a good deal on your APR is to make sure that you have a high credit score.
With a high credit score, you will certainly qualify for a lower interest rate. In order to get the best credit score possible, make sure that you pay all your bills on time and try to maintain a low credit to debt ratio. Your credit score is of utmost importance when it comes to getting a low APR on any loan.
Is it Possible to Calculate your Daily Credit Card Interest?
It is possible to calculate your daily credit card interest by using the information on your current credit cards. First, find the current APR on your credit card statement. According to Lantern by SoFi, “to apply the APR to the balance on a daily basis, the APR is divided by 365, the number of days in a year. That said, divide that number by 365. Lastly, multiply your balance by your daily interest rate. This shall give you a better understanding of how much you are paying on interest for your cards each day. The amount might surprise you.
Be a Responsible Credit Card User
There is no way to avoid the need for credit cards, but there are ways that you can avoid paying high interest rates. If you just use your credit card without paying attention to the purchases that you make, fees and amounts can add up quickly. By watching your credit card and calculating the interest, you can use your credit card in a beneficial way. You do need a credit card, but you also need to use them with care.