He who pays wrong, pays twice is a famous saying amongst lawyers. Relating this to credit cards drives home its meaning even more. After your card-swiping shopping spree, it is payback time for all credit card users. However, if the rates are not calculated properly, one may end up paying the wrong amount.
Before getting into any calculations, did you know there is a difference, or rather a similarity, between the interest charge and the interest rate? The interest charge would be based on the percentage of the balance, or in other words, the interest rate.
If that is confusing, let us use a small example to clarify this. Suppose you have a balance of $1000, if you multiply it with an interest rate of about 18 %, it would result in a total interest charge of $180 for the whole year. Since the balance varies from time to time, your interest charge will not be constant
There are several ways credit card interest charges are determined. Credit card companies should state the method of calculating your interest in the terms and conditions furnished. Even if it is an insignificant variation, the methods do make a difference to credit card users.
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