If you are contemplating getting a credit card, then it is important to understand how the credit card works. Here we explain the 'ins and outs' of how a credit card is charged interest and when that interest is charged.
The rule to remember here is that every time you have a balance on your card, you will be charged interest, unless you have a promotion at zero percent
for an agreed period of time. Interest can also be charged in any given month that you make a transaction or cash advance,
if your credit card does not have a grace period. At any time during the billing period, if you have a balance, then you will pay interest. Sometimes individuals can end up with two balances on their card, one with and without 0 percent APR. It is important to remember that you will still pay interest on any balance if you used your card.
When are you not charged interest?
If at the beginning of the billing cycle, you do not have a balance, then you will not pay any interest. Additionally, if you pay the balance off during any grace period, you will not pay any interest. If you have just acquired a new credit card, then the first bill that you receive should not have any billing charges, and also if you pay the bill in full before the end of the grace period, no charges will be incurred.
How much interest will you have to pay each month?
This can vary dramatically depending upon the card balance and changes to the interest rate. What we urge here is for you to find out how the company calculates those finance charges. So do contact your credit card provider, or read the terms and conditions on the literature that you received when you opened the account.