If you are using credit cards, it is extremely important that you completely understand how APR works. Unfortunately, many Canadians do not understand the details of their credit card terms – sometimes it feels like you need to be a mathematician to figure out exactly what is happening on your credit card statement.
This is a huge problem.
Misunderstanding your credit card terms could mean that you’re sending more money to your creditors than you think, while your actual debt stays high. Interest determines the amount of cash that you’re paying out to a creditor over the life of your debt. In turn, it also controls how much of your monthly payment is going toward the accrued interest charges. High interest rates can mean you are sending a constant flow of profit to your creditors instead of paying down your actual debt.
The infographic below helps to illustrate how your credit card interest works. You’ll find some tips on how to take control of your interest rates so you can finally focus on what matters most: getting debt free. If you still have questions, give us a call.