How does credit card interest actually work?

Credit cards have a grace period: pay the full statement balance by the due date and purchases never accrue interest, making the card a rolling interest-free loan with rewards attached. Interest only enters when you carry a balance, and then it arrives ugly: the APR divides into a daily rate charged on your average daily balance, compounding day after day, which is how a 24 percent APR quietly outruns its own sticker.

Two traps deserve naming. Carrying a balance typically forfeits the grace period, so even new purchases start accruing immediately until you pay in full again. And the minimum payment is engineered for duration: minimums on a few thousand dollars can stretch repayment past a decade, a disclosure now printed on every statement by law. The whole game reduces to one move: full statement balance, every month, automated.