Loan

Credit card interest is typically calculated daily using the Average Daily Balance method. APR is divided by 365 to get the daily rate, then multiplied by your balance.

APR (Annual Percentage Rate) is simple interest without compounding. APY (Annual Percentage Yield) includes compound interest, showing the true yearly cost or return.

Paying only the minimum extends repayment time significantly and increases total interest paid. A $5,000 balance at 20% APR with minimum payments can take 20+ years to pay off.