A credit card allows you to spend money up to a pre-set limit. You’ll get a statement at the end of the month with what you spent and paid off.
It‘s important to try to pay off the balance in full every month.You don’t have to, but you’ll need to pay off at least the minimum amount.
If you pay off the bill in full, you won’t pay any interest on what you’ve borrowed.
What happens when you don’t pay your credit card bill?
If you don’t pay off the bill in full, you’ll be charged interest. The interest starts to incur on the date of purchase.
The interest percentage is set by your credit card provider. The average interest rate is around 20 percent.
What about Cash Advances?
This is different for cash advances.
Cash advances usually come with a fee attached and a high APR with the remaining balance.
Most often when you take a cash advance, the credit card company starts charging interest right away – there is NO grace period to pay it off…
The Bottom Line
Credit card companies charge interest to ensure payment and make money. It is to your benefit to ensure you make your payments on time and in full to avoid any unwanted charges like interest.