When it comes to having a credit card, it can be a touchy subject. Many people get a credit card without thoroughly thinking through the idea and without investigating it. There are so many different terms and agreements that it can be easy to get confused quickly. Before you start to get lost in the confusion, stop and learn a little about your card.

One thing that many people have concerns about it how much interest they pay on a their credit cards. It can sometimes be a bit confusing and even misleading to some who sign up for credit cards. So how exactly do you determine how your credit card interest is calcuated?

Look At Your Statements

If you have never really looked and read through your statements, now is the time to start. You will want to check out the parts that talk about the interest rates. Depending on the card, each rate will be a little different. Typical cards vary between 7 and 36% inteterest rates but it depends on what card and bank you go with.

APR and Compounding

Even though APR stands for annual percentage rate, that doesn’t mean that the bank issusing your credit card only looks at your balance annually. Most credit cards are compounded monthly mean that the APR is divided into twelve different periods, or on a monthly basis. This can be somewhat confusing to some, but the interest you pay will be determined based on your balance for the month.