Credit cards have ruined lives, but should you be afraid of them? Let's take a look at some of the good, and the bad that goes with getting a credit card.
Further reading about the daily balance method discussed in the video:
The daily balance method uses the actual balance on each day of a billing cycle instead of taking the average balance throughout the month.
Going back to the example explained in the video, let's consider a situation where you have a $100 balance and an annual percentage rate of 20%. An APR of 20% gives you a daily interest rate of 0.0548%.
So how is your monthly interest calculated?
Interest Paid = (Day 1 Balance * 0.0548%) + (Day 2 Balance * 0.0548%) + … + (Day 30 Balance * 0.0548%)
This comes out to about $22 in interest for the year.
You can find further reading about the daily balance method here:
www.thebalance.com/daily-bala...
And you can find further reading about spending more with credit cards here:
www.nerdwallet.com/blog/credi...
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