Credit cards are the only consumer financial product where the issuer's profit and your loss share the same compounding curve — daily.
This used to be a back-of-the-envelope job. Now it is one tap, but the logic has not changed. Credit cards are the only consumer financial product where the issuer's profit and your loss share the same compounding curve — daily.
Most cards calculate interest using APR ÷ 365, applied to your daily balance. A 24% APR is really ~0.0657% per day — compounded.
Issuers add up your end-of-day balance for the cycle and divide by days. Even one big purchase early in the cycle inflates the whole month's interest.
Grace period only applies if you pay in full. Carry any balance and new purchases earn interest from day one.
$5,000 balance, 22% APR, $100/month minimum = 92 months and $4,200 in interest. The minimum is designed for the bank, not you.
Will closing a card hurt my score? Possibly — it lowers your total available credit and shortens credit history. Keep old cards open with one tiny recurring charge.
Are 0% APR offers worth it? Yes if you plan to clear the balance before the promo ends. Otherwise the deferred interest can hit retroactively.
The math is the easy part. Acting on what it tells you is where the real win lives.