Most credit cards have variable interest rates. Your credit card issuer may charge interest rates of up to 24%, you need to make sure to ask yourself “how much interest will i pay on credit card” before getting one and most importantly, you need to find the answer to that questions. This interest rate is reported on the card’s statement and does not change when you pay off your debt. You will see a statement statement periodically with the interest rate you’re currently paying, which may or may not match the interest rate on your credit card. Your actual interest rate is based on the rate your credit card issuer will charge you when you borrow money. Also, the interest rate you will pay on your credit card may be higher than the interest rate your credit card issuer is charging you.

When you borrow money from a credit card, your bank sends your credit card issuer a bill for the full amount of the debt. Because your bank sets the amount you owe at the time you make a purchase or debit a card, you end up paying the full amount each time. As a result, when you borrow money from your credit card, you pay interest on the entire balance, not the interest only charged to the outstanding balance. For example, say you borrow $50 from your credit card and pay it back to your credit card the next month. You will end up with a balance of $75. When you pay the next month’s bill with the same amount of money, the $25 you pay next month will be the balance due on your next statement.

If you add interest to your borrowed money, your interest rates will increase, usually within a few days. If you pay back the debt in full the same day the interest is added, the additional interest you pay on the credit card balance that is due will be a few cents a day.

The purpose of credit card interest rates is to help banks and credit unions raise money. If you’re paying interest on your credit card balance in the way that your credit card issuer is asking, your interest rates are the best they can be, and they won’t go up. If you don’t pay the full amount due each month, your credit card issuer will lose money on the debt and may even get paid less than the total amount owed to the bank or credit union.

Your credit card issuer must send your credit card issuer a bill for the full amount of the debt and must keep a record of the amount you owe for each statement. Credit card issuers may set the minimum amount you must pay each month before additional interest is added to the balance you owe.

Read the terms and conditions of your credit card as you see them to understand what kind of interest rate you can earn.