How Credit Cards Work: Billing Cycle and 'Grace Period'

This video demonstrates how the "interest free" grace period works with credit cards, the importance of paying off the statement balance in full each month, and the hidden danger of carrying a balance.

It should also help clear up any confusion about your "statement balance" versus your "account balance", and how and when interest is charged to your account.

[jg]

Out of all the videos I have seen about grace period/interest charging on credits cards, this is by far the most CLEAR to understand. Wow thank you

[qhealthandwellnes]

After 1700 google searches.
This is the only one explaining it for us normal folk. Thanks. I can go sleep now

[johnny]

Yes yes yes! Finally the million dollar answer I’ve been looking and questioned myself for years! Everyone talks about how to use a CC, tips, score etc. But no one about billing cycle, what is exactly due and when. (At least not this simple) THANK YOU !

[russwes]

If you make the full payment each month, your credit score will keep going up each month and make your life a lot easier down the road when you need to make big purchases (a house or car)

[mikeo]

I think explaining utilization would benefit alot of people also. Because paying off the statement balance doesn't necessarily help your score. If you have a limit of 1000 dollars, and your balance is 700 dollars at statement close. Even though you payoff the full payment due, which would save you the interest. The credit bureaus see a 70% utilization and this would cause your credit score to go down since utilization accounts for 35% of your credit score. My advice would be to treat your Statement close date as though it was the due date, or keep your balance below 25% prior to the statement close date. I make 2 payments each month. 1 two days before statement close to make sure my balance is less than 15%, and then pay the remaining statement balance before the due date.

[peppietree]

I was so confused trying to understand if I should just pay it FULLY without me getting a letter from the statement! But seriously all I have to do is WAIT for the statement! Omg

[rsalas]

this is so straight to the point, i love. I wish i would of found this video a long time ago before spending 485734 hours of youtubers taking 20-30 minutes explaining this.

[GOjoe]

I normally don't make comments, however, where you mentioned that by carrying a balance to the next month automatically makes the interest accrual increase exponentially, I had to say this was one of the better explanations due to the fact that nobody else has ever mentioned or explained that clearly as you did here. Thank you for that priceless tip.

[CumminsNDBest]

Those other videos on youtube were Garbage trying to explain this..This genius made it so easy for me!!! Thanks Professor!!

[jacobt]

This was the video needed to allow me to confidently use my credit card. Thank you for the visual representation, reading the technical jargon while being a novice in the banking world is a little scary.

[jessi]

THANK YOU!!! 😭 Out of all the videos trying to explain this, yours was the most helpful! I get it now!!!

[chongzhao]

Thanks a lot for the explanation!!!~ I paid off my statement balance of the last billing cycle immediately after watching this video...

[ulisesanguiano]

By far, the best video made regarding how a Credit Card actually works. Most videos simply explain the difference between a credit card and debit card and state that you should pay the full balance by the end of the month. But why? what will happen? they state that interest will be added? but how? when? why?
Thank you for this video !

[KellyKidd]

Why everybody don’t explain the way you do. I had to watch several videos to get a clear understanding of this. Thanks my Mans! 🙏🏾

[madhusudhanaerappareddy]

Awesome video!

simple, short and well explained.

[alexanderclark]

This explained the process so well. Thanks! It was confusing to me starting out and wanted to get it figured out!

[MrDude]

omg finally a fucking vid that explains it

[mississippiapple]

i've seen tons of these types of videos, but this one was hands down best.

[richardsolava]

This is very informative thank you for posting this! Before I saw this video I would pay off the full balance of $300 even though the statement balance would show $100. I would do this to avoid any interest. I thought you would have to pay the current balance all of the time to not pay any interest at all. Thanks again for the info!

[deezballzonyochin]

all I needed was a visual image of this, muy understanding is 10 times better. thanks