A 24% APR on a credit card is another way of saying that the interest you’re charged over 12 months is equal to roughly 24% of your balance. For example, if the APR is 24% and you carry a $1,000 balance for a year, you would owe around $236.71 in interest by the end of that year.
Fortunately, you won’t be charged the 24% APR if you pay off the full balance by the due date every month. If you carry a balance from month to month, however, you’ll end up paying a good bit in interest. That’s because each day the balance goes unpaid, interest charges are compounded. In other words, interest is added to both your principal balance and any previous days’ accumulated interest.
Given that some months have more days than others, the credit card issuer will break down the APR using a daily periodic rate (DPR) to determine how much interest you’ll pay for a given billing period. To get the DPR for a credit card with a 24% APR, simply divide 24% by 365. The result is a rate of 0.0658% per day. Daily interest charges apply until the outstanding balance is paid in full.
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