How Credit Card Interest Works: The Math

Have you ever wondered how credit card interest works? How do they determine how much you owe?

Your credit card probably lists an annual interest rate, an "APR". This video will explain how to use your APR to figure out exactly how much interest you will owe on your credit card bill. The banks usually use a method called "Average Daily Balance". This video works though an example of the math, so you can get a deep understanding of what goes on behind the scenes.

[TheProductions]

Wait a minute I got a question...maybe I'm missing something what if you make a whole bunch of purchases In the very 1st day of the month and then pay the whole balance on the very last day of the month. Wouldn't you still be charged interest since it's charged daily?

[cpickell]

Incredibly helpful video. Isn't it crazy that we aren't properly educated on these things in school? Why don't we just have a class called "Life"?! Instead we either have to figure them out ourselves, or being affected by them without our knowing or understanding. Thanks for putting together such a helpful video.

[jqgatson]

The is the most comprehensive explanation I've seen on APR and how it's actually calculated. Great video!

[erindav]

You my friend have dumbed this down so well that ANYone will understand it. I am 60 years old and never realized exactly how this was calculated.

[madheadmadDAZ]

Finally someone who knows what they are talking about and doesn't just say a load of nonsense in some pathetic attempt to sound intelligent. Well done for explaining in a way that is understandable.

[xuforia]

After a lot of shuffling through not so helpful videos, this one is really well explained and amazingly eye-opening explanation. Thank you so much!

[andremarkthomas]

Dude thank you! Some of us need to understand the details of things to understand it at all. Please make more videos. I really appreciate you not rambling on in your intro like a lot of you tubers do and keeping things simple and clear!

[angelicalopez]

Within the first minute you explained better than anyone has done in all the videos I have watched! Thank you!

[Peaceful]

Fabulous! You have simplified it in such a direct manner that anyone can understand. Thank you for teaching it in an uncomplicated and swift manner!

[robertsmall]

A+. I googled and watched other videos and this one answered my question and clarified things immediately. Very well done.

[NewGeneration_Media.]

this is by far the best explanation ive gotten on the APR calculation...makes alot of sense to me... thanks so much mr Peterson for advising me since am a new credit card holder.

[majeednoroozi]

Wow, what an amazingly clear and straightforward explanation. I thank you so much for that.

[joshlyra]

WOW! This video should be mandatory for all high school students to see! Great job! Finally... clarity!!!
THANK YOU!!

[saulgarcia]

im going to be working for American Express soon, so i want to become a straight wizard at credit cards, and you're helping me reach the goal my man !

[jeremyb]

well explained. My bankers were unable to explain thorough so i am glad you did. saved me time

[sincerelyshans]

Lovely video! Great, clear, concise, informative points! Saving this video to watch again for future reference :) thanks !

[PirateTubeTV]

This guys a wizard. Truly blew my mind.

[malcomdonley]

Thanks showing the actual example made it so much easier keep up the good work 💪🏽

[BreathBeets]

Awesome video man. Thanks for taking the time to put it out there in such an easy to understand format. Also extra points for the visuals!

[jonypalacios]

I wish I could like this video 100 times. Quick and very informative. Thanks