How does credit card interest work?
We’re all kind of familiar with the basics, right? A credit card can help build your credit score and earn rewards like points or cash back as long as it’s used responsibly, otherwise, it can be harmful and charge steep double-digit interest rates. It's the classic example of a double-edged sword. But when does credit card interest kick in? And how is it actually calculated? The truth is it can be downright confusing, and many Canadians are in the dark about the specifics1. To help lift the veil, we’ve broken down exactly how credit card interest works below. When does credit card interest enter the picture?Roughly every 30 days, a statement arrives in your inbox or banking app with what can feel like an overload of information, including a list of all the purchases you made over the past month. Arguably the three most-crucial pieces of info can be found near the top-right corner of the statement: Statement balance (or new balance) Minimum payment Payment due date The statement balance is the total amount you’ve spent on the credit card. As long as you pay back the full balance on time by the payment due