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.
Don't forget to watch How Credit Card Grace Periods work to avoid interest all together: • How Credit Cards Work:...
Пікірлер: 559
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?
@TheProductions101
2 жыл бұрын
Unless you pay your credit card after every charge?? Idk someone please explain this to me.
@WillPeterson
2 жыл бұрын
It all depends on whether you are still in the interest-free grace period or not. I've got a really short video explaining it: kzread.info/dash/bejne/ho1_l6l6ZNi_p7g.html
@Aid-1-
Жыл бұрын
why would interest be charged, if you pay of the whole balance at the end of the month???
@user-ug2hk3go6i
Жыл бұрын
@@Aid-1- It is my understanding there is no interest charged as long as on make the full payment before the payment due by date I pay my card off every month and have not paid interest in several years.
@bungus49
10 ай бұрын
yep, as long as you make your payments, no interest charge. When you're late however, uh oh, get that taken care of as soon as possible. @@Aid-1-
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.
@SergGutta
7 жыл бұрын
seriously bro
@williamrgrant
7 жыл бұрын
If we all took this class then the banks wouldn't make any money off us. There is financial incentive for us to be slaves to the system. That's why! It's intentional!!!
@FuzzyElf
6 жыл бұрын
We will also need classes in automotive maintenance (to understand if not do it), groceries management, meal preparation, electricity bills, water bills, gas bills, checking and savings account management, child rearing, pet care, how to use appliances small and large, water safety, travel management, law (including how it's enforced), tax preparation, how to be a student past high school (college, trade, etc.), debt management, how to cross the street, and Don't Forget To Breathe. Children's schools cannot teach everything. What they can teach are basic skills to help us understand and learn. We should learn at least basic math skills, reading comprehension, effective writing / communication, logic, and the importance of USING these skills. One hopes that parents and guardians will see to the additional education children need. Having said all this, I'll propose that children's schools could at least consider assessing needs, and developing and offering some additional "Life" classes.
@brendanleighton
6 жыл бұрын
It's sad but true, parents don't do a good enough job raising their kids that we need to rely on others to teach us life skills.
@user-yr3uj6go8i
6 жыл бұрын
If schools started teaching more about this enormous trap, the banks would steal less money from us. The banks deeply hate critical-thinkers who make sagacious decisions with credit cards.
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.
@carterstarr5255
3 жыл бұрын
Deeply happy I come across this trustworthy vendor been the 3rd time for me to get my CC from him (Morgan101Cc) on telegram..
The is the most comprehensive explanation I've seen on APR and how it's actually calculated. Great video!
@NewGeneration_Media.393
4 жыл бұрын
truly
@nakedmoney_5762
4 жыл бұрын
yes! could not agree more!
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4 жыл бұрын
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4 жыл бұрын
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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.
@WillPeterson
6 жыл бұрын
Hey that means a lot! Thanks man!
@tinamiller8849
3 жыл бұрын
@@WillPeterson hey will. This was so amazing and simple. whats the software you used to illustrate the balance vs billing cycle?
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!
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!
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!
Wow, what an amazingly clear and straightforward explanation. I thank you so much for that.
A+. I googled and watched other videos and this one answered my question and clarified things immediately. Very well done.
Within the first minute you explained better than anyone has done in all the videos I have watched! Thank you!
Dude. You are AWESOME.
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!
@WillPeterson
6 жыл бұрын
Joseph Kemp I appreciate the feedback! Glad it helped
MY MAN! This is the video I was looking for. Thanks brother
Thanks showing the actual example made it so much easier keep up the good work 💪🏽
Excellent job at explaining, subbed in 2019👍🏼👍🏼👍🏼
Super clear illustrative video . Big thanks for the great simple work here 🙂
I've been looking for a video to better understand APR.....Great video, so easy to understand and awesome examples!!!
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.
wow, this is a very nice and professionally done video presentation. the audio/visual are good job well done.
I wish I could like this video 100 times. Quick and very informative. Thanks
Beautifullllllllll. Lovely video! Great, clear, concise, informative points! Saving this video to watch again for future reference :) thanks !
Wow bro. You explained it perfectly. 100 % made sense. Subscribed. Thank you
This is an insanely good explanation of this whole credit card ordeal. Thank you very much!!! I subed. 😉
Old but still great. This is exactly what I was looking for, thanks ! Great video !
Thank you so much!!! I couldn’t wrap my head around how APR was precisely calculated although I knew it had to do with the interest (and you shouldn’t pay interest anyway) until watching THIS video! I love how thorough you are! I love the graphs, the different financial scenarios, and how you showed us all of the math and explained throughout! Yay!🤍
@WillPeterson
4 жыл бұрын
Great to hear!
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This was a VERY thorough explanation. So much clearer now, thanks!
Excellent video. Thank you for your service.
This was a really good video - I assumed it was done on a monthly basis, didn't realize it was a daily balance. Thanks a lot!!
WOW! This video should be mandatory for all high school students to see! Great job! Finally... clarity!!! THANK YOU!!
This guys a wizard. Truly blew my mind.
Amazing video! Thank you so much. Helped me out a ton!!
Bro you explained what I needed to know in the first minute. Thank you
well explained. My bankers were unable to explain thorough so i am glad you did. saved me time
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 !
OMG finally someone explained this!! THANK YOU!!
this is the most easy to follow video i have found thus far. Thank you
Great video, man. Simply put. Cheers!
thank God. Been looking for a good explanation all night and finally found this vid. Thank you.
@kathydarling9406
4 жыл бұрын
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Even though I'm pretty good with money and learned about finance in high school, I still didn't know how credit card interest and apr actually worked. Thanks for this great video!
Very logical, on point, and professional video. Thanks.
Thanks for helping me understand this. I would always calculate Apr by multiplying the FULL Apr to the monthly balance. Boy was I off! Bless you brother
@kathydarling9406
4 жыл бұрын
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Great detail. Excellent job with this video!
So detailed great video so much more to the APR than most people realise....cheers
You made is seem so simple. Thank you for explaining this!
brilliant explanation, I may need to watch it a few more times but i think I get it😁 Good work!
Thank you so much, super simple explanation and easy to understand !
Thanks mate. Awesome job with the explanation
Amazing video Will! Simple and easy to follow through, keep doing this great work 👍
@WillPeterson
4 жыл бұрын
thanks for the feedback Abhishek!
Best video out there explaining Interest charge. Cheers lad
@kathydarling9406
4 жыл бұрын
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5 жыл бұрын
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3 жыл бұрын
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Excellent explanation. I actually saved your video so I can refer to it if I need to. Thanks alot
30 years old and some of this is new information to me! Keep up the great work!
@kathydarling9406
4 жыл бұрын
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THANKYOU SO MUCH! BEST EXPLANATION EVER
omg this video is so helpful, thanks so much! the diagram graph you showed was critical
AWESOME!!! This is exactly what I was looking for. Thank you so much
@kathydarling9406
4 жыл бұрын
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Good stuff. Well articulated.
Thanks so much for this video! trying hard to understand this so i can get out of this debt
Very informative, thank you so much!
This inf was exactly what I was looking for . Thanks
This should be the top video watch 3 videos and still didn’t get it thank you
Thanks!! You explained it so well
Super helpful, thank you for this explanation.
An absolutely excellent explanation. Thank you.
this is such a well explained video, thank you very much!! very helpful! :)
@kathydarling9406
4 жыл бұрын
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That was super helpful, I’ve actually learned something, thank you!
@nakedmoney_5762
4 жыл бұрын
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I know it’s 5 years later, but Thank You so much for this video and explaining the math! You Rock!!
Love the way you explained it, thank you
Master Class right here, thank you!
Hey thanks a lot for this! Good visuals
Yo! this was great!! This is the kinda thing they should be teaching in school.
Omg your awesome dude. Thanks for the video!.
Amazing video man
This helped so much. Thank you!
Brilliant explanation!
you are such a good teacher! thank you!
Impressive and thorough. Helpful and smart graphics. Well done sir.
Great video, Excellent explanation thank you.
This was so helpful thank you!
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Great video thank you brother!
Thank you so much for this video.
Great explanation!!!! Thank you!!!
Mad good. Big thanks man
The only video you need, this couldnt be taught any better.
I GET IT NOW! This is so simple! But no one ever explains it! Thanks! Is there anything to look for when getting a credit card if you plan to pay it off in full I.e. boosting rewards and credit rating?
@WillPeterson
7 жыл бұрын
Best advice is to find a nice simple card that gives you 2% cash back on everything! I believe the Citi Doublecash does this. Other good ones are like Chase Freedom and Discover IT which give 5% cash back on different spend categories each quarter. I would avoid cards with annual fees.
@candypietravels
7 жыл бұрын
LockonKun I don't get it
@semisituitupou6397
6 жыл бұрын
Not sure I can agree
@carterstarr5255
3 жыл бұрын
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3 жыл бұрын
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Very Useful video. Thanks
Such a good explanation.
You explained this so much better than my professor. Thank you!
Yo bro this video was Clear as daylight!!! Now i fully understand my credit cards and how interest is applied
@kathydarling9406
4 жыл бұрын
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Finally a proper explanation thank you!!
Thank you This is absolutely helpful
Finally I understood, thank you very much, that's the clearest video I found!
@kathydarling9406
4 жыл бұрын
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Super helpful. Was always wondering about when the interest started accruing based on time of purchase and when the bill was due. Turns out I can pay it sooner and save some money!
Good stuff dude
Thank you so much for this! You are doing gods work for sure man
@WillPeterson
4 жыл бұрын
Glad it was helpful!
You my good fellow, you’re the man 😢👌🏾
Extremely helpful video. Thank you. So smart. I wish I were as good at math as you!!!
Great informative content