What is Credit Card Interest and How Does it Affect Me?

Getting your first credit card is super-exciting. That small piece of plastic is a gateway to adulthood, and when used responsibly, it can be your first concrete step toward establishing sound financial habits to last a lifetime. Unfortunately, though, many teenagers and young adults don’t know enough about credit card interest when they open their first credit line (such as with a credit card) and end up deeply in debt — and quickly.

Don’t let this be you! Be sure to learn all you need to know about credit card interest and how it works before you apply for your first credit card.

What is credit card interest?

Interest on a line of credit is money the credit card issuer charges to the cardholder for borrowing money every time they use their credit card. The interest is generally set at an annual rate known as the annual percentage rate, or the APR. Credit card companies use the APR to calculate the amount of daily interest the cardholder is charged for purchases as well as the unpaid balance on the line of credit associated with the card.

Important credit card terms to know

Before learning how credit card interest is charged, you’ll need to know some basic credit card billing terms:

  • A credit card billing cycle is the period of time between credit card billings. Billing cycles can range from 20 to 45 days, depending on the credit card issuer. During that time frame, any purchases, credits and interest charges will be added to or subtracted from the balance.
  • When the billing cycle ends, you’ll receive your credit card statement, which will reflect  all unpaid charges and fees for this period of time.
  • The statement will also highlight the payment due date, which tends to be approximately 20 days after the end of the billing cycle.
  • The time frame between the end of the billing cycle and the payment due date is known as the grace period. If you neglect to pay your bill in full before the grace period ends, the outstanding balance will be subject to interest charges.

Calculating interest charges

To calculate your interest charge for a billing cycle, follow this formula:

Step 1:  Divide your APR by the number of days in a year to get your daily periodic rate, or the amount of interest your credit card issuer charges cardholders during each day of the billing cycle.

For example, if your APR is 18.5%, you’ll divide that by 365 to get your daily periodic rate of .0005%. (0.185 / 365 = .0005)

Step 2: Multiply the daily periodic rate by your average daily balance, or the balance you carry during each day of your credit card’s billing cycle, to get your daily interest charge. To find your average daily balance, look on your credit card bill. You can also determine your average daily balance by taking the sum of the balances at the end of each day in the billing cycle, and dividing that number by the total number of days in your billing cycle.

Using the numbers in the above example, if your average daily balance is $1,200, you’d multiply this number by your daily periodic rate (.0005%) to get a daily interest charge of $0.60. (0.0005 * 1,200 = 0.60)

Step 3: Multiply your daily interest charge by the number of days in your billing cycle.

Staying with the above example, if your billing cycle is 30 days, you’d multiply $0.60 by 30 to get an interest charge of $18 for this billing cycle. (0.60 * 30 = 18)

Avoid paying interest

Credit card issuers will only charge interest if you carry a balance from one month to the next. If you pay your balance in full before the grace period ends, there will be no interest charged. It’s a good idea to familiarize yourself with the payment due date on your credit card billing cycle and to set a reminder to pay your bill before it’s due whenever possible.

If you have a large outstanding balance and paying it in full at the end of the billing cycle is not possible, at the very least try to pay more than just the minimum payment each month. It’s also a good idea to avoid charging more purchases to your card if there is already an unpaid balance. Remember: A credit card purchase that is not paid off before the payment due date can mean paying for that purchase for months, or even years, to come.

Credit cards are a necessary part of life. Building a strong credit history can open the door to long-term loans and other financial opportunities, but neglecting to learn how credit card interest works can lead to a spiral of debt. Before opening your first credit card, brush up on your knowledge of how credit card interest works and how it affects you as a cardholder.

Your Turn: Have you recently opened your first credit card? Share your beginner tips for responsible credit card use in the comments.

Learn More:
magnifymoney.com
investopedia.com
finder.com
credit.org

Get Good With Money: Ten Simple Steps to Becoming Financially Whole

Title: Get Good with Money: Ten Simple Steps to Becoming Financially Whole

Author: Tiffany Aliche

Hardcover: 368 pages

Publisher: Rodale Books

Publishing date: March 30, 2021

Who is this book for? 

Anyone looking to take charge of their personal finances, get their spending under control and learn how to live with financial wholeness.

What’s inside this book?

  • The 10-step formula for attaining financial security and peace of mind that was created and perfected by Aliche, AKA “The Budgetnista.”
  • Checklists, worksheets, a toolkit of resources and advanced advice from money-management experts.
  • Real-life examples to bring financial lessons home.
  • Actionable steps for taking charge of your credit score, maximizing bill-paying automation, savings and investing and calculating your life, disability and property insurance needs.

5 lessons you’ll learn from this book: How to achieve and maintain financial wholeness through a series of financial improvements.

  • How to create the game-changing “noodle budget.”
  • How to see your credit score as a grade point average.
  • How to practice mindful budgeting and spending habits.
  • A simple calculation to help you retire early.

3 questions this book will answer for you: 

  • How can I determine if my money problem is that I don’t earn enough or I that I spend too much, and how do I fix either issue?
  • How can I learn to make a habit out of saving for a rainy day?
  • How can I protect my beneficiaries’ future?

What people are saying about this book:

  • “Aliche can take the most complex of money concepts and distill them into something relatable and understandable. No matter where you stand in your money journey, Get Good with Money has a lesson or two for you!” — Erin Lowry
  • “Get Good with Money helps you put all the pieces of your financial life together without making you feel overwhelmed or ashamed about your circumstances. Whether you need to budget better, slash debt, and save more money or learn to invest, boost your net worth, and build wealth, Tiffany Aliche offers great advice to let you know you can do this, sis!” — Lynnette Khalfani-Cox
  • “I’m so inspired by Tiffany Aliche’s own story of digging out of deep debt and building back her credit and her cash flow. Get Good with Money will soon have you believing in your own ability to set yourself up for a life that’s rich in every way.” — Farnoosh Torabi

Your Turn: What did you think of Get Good With Money? Share your opinion in the comments.

Learn More:
amazon.com
goodreads.com
getgoodwithmoney

Big Money Energy: How to Rule at Work, Dominate at Life, and Make Millions

Title: Big Money Energy: How to Rule at Work, Dominate at Life, and Make Millions

Author: Ryan Serhant

Hardcover: 240 pages

Publisher: Hachette Go

Publishing date: Feb. 2, 2021

Who is this book for? 

Anyone who is ambitious enough to dream big and willing to learn how to achieve the one thing they can always control: the energy they give off.

What’s inside this book?

Serhant’s rags-to-riches story, which includes the steps he took to pick himself out of the low-rent life and move upward until he earned his first million.
An in-depth look at how pure energy can change the direction of your life.
A lively guide for how to attain “Big Money Energy” and reach your goals.

5 lessons you’ll learn from this book: 

  • The significance of the energy you give off and how it directly impacts every area of your life.
  • Why anyone can climb the ladder of success, regardless of their life circumstances.
  • How to exude confidence in any situation.
  • How to take control of your life and achieve your deepest ambitions.

3 questions this book will answer for you: 

  • What is Big Money Energy and how can I bring it into my life?
  • Do I need to accept an average life?
  • Is it possible to dream too big?

What people are saying about this book: 

  • “Big Money Energy is like a mentor for anyone with a big dream they want to make a reality! Ryan Serhant guides readers to find their confidence, overcome self-doubt and exceed their own expectations.” ― Barbara Corcoran
  • “This book isn’t just about changing your energy — it’s about taking control of your life. Big Money Energy provides an actionable blueprint that readers can use to create positive change now.” ― Mel Robbins
  • “Big Money Energy is the ultimate primer for success. Ryan Serhant shows readers how to exude positive energy, own a room and make their biggest dreams a reality.” ― Daymond John
  • “In Big Money Energy, Ryan Serhant shows readers that when positive energy is mixed with self-confidence and topped off with a heavy dose of hustle… anything can be achieved.” ― Sophia Amoruso

Your Turn: What did you think of Big Money Energy? Share your opinion in the comments.

Know Yourself, Know Your Money

Title: Know Yourself, Know Your Money: Discover WHY you handle money the way you do, and WHAT to do about it!

Author: Rachel Cruze

Hardcover: 272 pages

Publisher: Ramsey Press

Publishing date: Jan. 5, 2021

Who is this book for? 

Anyone who’s ever wondered why they make the money choices they do and how they can change them for the better.
Anyone who has ever tried to understand why the people in their lives make the money choices they do.

What’s inside this book?

The introduction and explanation of the 7 Money Tendencies:

1. Saver or Spender

2. Nerd or Free Spirit

3. Experiences or Things

4. Quality or Quantity

5. Safety or Status

6. Abundance or Scarcity

7. Planned Giving or Spontaneous Giving

New ways to understand how your parents, your fears and your beliefs impact your money mindset.

5 lessons you’ll learn from this book: 

  • Where you land on the scale of the Seven Money Tendencies and why it matters.
  • Which of the Four Childhood Money Classrooms shaped your money mindset.
  • How the Six Core Money Fears can drive your most common money mistakes.
  • Why you handle money the way you do, and what to do about it.
  • How to take control of your money to achieve financial freedom.

3 questions this book will answer for you: 

  • How does my childhood impact the money choices I make today?
  • Why do I constantly make money mistakes?
  • How can I change my money mindset for good?

What people are saying about this book: 

  • “Rachel does such a great job of getting to the root of why we make the money decisions (and mistakes) we do. This book is a self-discovery necessity.” — Marcus Buckingham
  • “I have often said if you want to understand someone, look at their checkbook and their calendar. How we spend time and money says a lot about who we are. Rachel goes deep into unraveling that mystery.” — Dr. Henry Cloud
  • “We’re all faced with the responsibility of managing finances. Rachel Cruze dives deep into why we interact with money the way we do… so you can make real progress toward your money goals!” — Candace Cameron Bure
  • “This book will not only change your money habits, it will also improve your relationships — and your life!” — Christine Caine

Your Turn: What did you think of Know Yourself, Know Your Money? Share your opinion in the comments.

Rewire for Wealth: Three Steps Any Woman Can Take to Program Her Brain for Financial Success

Title: Rewire for Wealth: Three Steps Any Woman Can Take to Program Her Brain for Financial Success

Author: Barbara Huson

Hardcover: 256 pages

Publisher: McGraw-Hill Education

Publishing date:  Jan. 12, 2021

Who is this book for? 

  • Women who’ve gotten a harsh financial wake-up call.
  • Women who want to learn about money management to be financially independent.
  • Women who have always been intimidated by money.
  • Women who think they’re just not “wired” to handle money well.

 What’s inside this book?

  • Huson’s story of how the men in her life handled her money and then hung her out to dry when things got tough.
  • A physiological explanation for why men and women often have very different approaches toward money management and wealth growth.
  • Huson’s revolutionary approach toward changing financial habits.

Five lessons you’ll learn from this book: 

  • How to apply a proven three-step formula ― recognize, reframe and respond differently ― to rewire the brain for a more confident approach to wealth building.
  • Why women often process financial information in a detrimental way.
  • Why every woman needs to know about financial planning.
  • How to eliminate damaging financial behavior.
  • How women can empower themselves to build wealth.

Four questions this book will answer for you: 

  • Why do all the men in my life have such a vastly different approach toward money than I do?
  • Is there a way for me to rewire my brain to process information differently?
  • Will I be stuck in a financial rut forever?
  • Which obstacles are standing between me and financial empowerment?

What people are saying about this book:

  • “If mastering your money feels daunting, you need this book. Barbara expertly exposes what could be holding you back with simple, practical solutions to finally rewire your thinking and truly build a wealthy life.” — David Bach
  • “Barbara Huson is the unequivocal leader in helping women rewire themselves for wealth. This book will go down in history as a total game changer for us.” — Ali Brown
  • “This book will change your life, if you let it.”— Marci Shimoff
  • “Barbara Huson has done it again. By digging into the ways women think about money differently than men do, she is able to chart a path toward lifelong security — and wealth.” — Jean Chatzky

Your Turn: What did you think about Rewire for Wealth? Share your thoughts with us in the comments.

Pass It On: Transferring Wealth, Wisdom, and Financial Smarts to Future Generations

Title: Pass It On: Transferring Wealth, Wisdom, and Financial Smarts to Future Generations

Authors: Lori B. Gervais and Roger G. Gervais

Paperback: 268 pages

Publisher: Lioncrest Publishing

Publishing date:  Oct. 9, 2020

Who is this book for?

  • Parents planning for their children’s financial futures
  • Those wanting to further their own financial knowledge and skills
  • Readers who are or will soon be starting a family

What’s inside this book?

  • Clients’ stories of talking to children about managing wealth
  • Tips on how to begin the conversation about preserving the family fortune
  • Lessons on transferring family values, as well as transferring wealth
  • Instructions on preparing children to inherit responsibility as well as money
  • The authors’ personal experiences both in growing up and in raising their own children

Lessons you’ll learn from this book: 

  • How to speak to children about preserving your family’s wealth
  • How to ensure your personal values concerning your money are maintained
  • How to instill responsibility
  • How to use money for creating a great positive effect on your community and future generations
  • How and why financial literacy must be addressed within the family

Questions this book will answer for you: 

  • How do I prepare my children to manage their inheritances?
  • How can I maintain my family values while also transferring family wealth?
  • How do I introduce the topic to my family?

What people are saying about this book: 

“Managing money and finances can be some of the most challenging concepts for any family to navigate. I love the way the authors break it down and give us ways to help not only as a couple managing finances…more importantly equipping us with tools to help educate our family, setting us up for success for the future.” — Tara Gundrum

“…Pass It On, provides a financial framework that all of us can customize to meet our financial and life objectives. It goes well beyond wealth management or estate planning, providing clear, practical and actionable guidance we can all apply to virtually any financial matter. A must read.” — H. Edward Wynn, author of We the People: Restoring Civility, Sanity and Unifying Solutions to U.S. Politics

“Many parents fear leaving their kids’ substantial wealth. It can be difficult to know if they will be good stewards of what you leave them. If you are looking to learn a path and framework for passing on wealth and wisdom to those you care about, you will want to check out this book.” — Timothy J. McNeely, CFP CIMA

Your Turn: Tell us how you’ve used the advice of “Pass it On” in your own life.

Paychecks & Balances

Rich Jones and Marcus Garrett are a dynamic duo on a mission to help struggling millennials learn to manage their money and pay off debt. Together, the pair launched Paychecks & Balances, a podcast with more than 5K followers where they share insightful tips and advice on all things financial.

Jones brings his background in human resources to the P&B community, but it’s his journey toward a debt-free life that enables him to really connect with his audience. Likewise, Garrett has paid down $30,000 in debt and understands the financial challenges facing millennials.

The finfluencers’ interview-based podcast is super popular with millennials looking to learn more about money and/or seeking actionable tips on improving their finances.

Here are the core beliefs of Paychecks & Balances:

  • Money does not have to be complicated — or boring. When Jones wanted to broaden his financial knowledge, he found the podcasts and blogs available online to be incredibly boring. He’s therefore determined to keep his own podcast jargon-free and entertaining while still providing the audience with valuable information.
  • Freedom looks different to everybody. We each have our own version of freedom. To some, it can mean being excited to go to work. To others, it can mean having the ability to travel anywhere on a whim. At P&B, no one is shamed for having a day job and answering to a boss, so long as it brings them personal fulfillment.
  • Mental health matters. Jones and Garrett are big believers in mental wellness. They freely sprinkle conversations about mental health throughout their content.
  • Diversity isn’t just a buzzword. The duo believe that diversity is key to financial inspiration and education. The P&B podcasts feature a range of guest speakers from all kinds of backgrounds and demographics.
  • Good career decisions lead to good financial outcomes. You’ll find lots of advice on acing interviews, negotiating salary and choosing the best career path on P&B.

You can tune into the P&B podcast episodes on a broad range of financial topics, check out their blog  for easy-to-read articles that pack a real punch and follow the duo on Twitter , Instagram and/or Facebook.

Your Turn: Are you a P&B follower? Tell us about it in the comments.

Learn More:
paychecksandbalances.com
izea.com

5 Apps to Download this Holiday Season

Todoist
With the holidays coming, there’s so much to do! Keep it all organized with this top-rated productivity app. With Todoist, (iOS, Android) users can create and manage to-do lists, track completed tasks and set reminders for those last-minute oft forgotten holiday errands. Download the free version, unlock additional features for $3/month or upgrade to the premium version for $5/month.

Key features:

  • Task management — The app’s slick interface and many convenient features make task management easy, even when your to-do list is longer than Santa’s beard.
  • Prioritize tasks — Make sure you get the most important stuff done before moving on to your holiday wish list by prioritizing tasks.
  • Project goals — Set goals and timelines for when you want a specific task to be completed and let the sophisticated visuals keep you focused on your goal.
  • Reports — Track your progress on various tasks with the app’s measurement and reporting features.
  • Cross-platform use — Todoist lets you sync your lists across all devices for easy task-tracking and management.

Christmas Countdown
Get into the holiday spirit with the ultimate snowy countdown to Christmas (iOS , Android) !

Key features:

  • Choose from eight beautiful, holiday-themed backgrounds to customize your app.
  • Enjoy classic Christmas music without intrusive ads.
  • Unwrap a new virtual gift every day of December.

Christmas Gift List
Significant others, kids, parents, friends, workmates, gym buddies, great aunt Martha — there are so many gifts to keep track of this season! Ward off that migraine that starts forming each time you tackle your multiple gift lists by downloading this super-convenient app. The Christmas Gift List (iOS, Android) app will organize your lists and let you track your ideas, spending and progress as you shop. Gift-shopping is fun again!

Key features:

  • Set a budget for everyone on your list to help keep your spending under control.
  • Share your list with shopping buddies through Twitter and emails.
  • Easily cross gifts off your list by updating their status as you shop.

Elfster
If you’re planning a secret Santa exchange with your friends and family, you need to download this app. Elfster (iOS , Android) will let you create and track multiple groups of secret Santa exchanges and help keep things organized with its user-friendly interface.

Key features:

  • Set a delivery date for each group, along with a fixed budget and a customized message for all group members.
  • Invite friends to join a group through email, or by sharing a group link.
  • Assign a secret Santa for each group member easily through the app’s generator feature.

Your Turn: What’s your favorite holiday app? Tell us all about it in the comments!

Learn More:
mobileappdaily.com
getandroidstuff.com

The Path: Accelerating Your Journey to Financial Freedom

Title: The Path: Accelerating Your Journey to Financial Freedom

Authors: Peter Mallouk, Tony Robbins

Hardcover: 320 pages

Publisher: Post Hill Press

Publishing date:  Oct. 13, 2020

Who is this book for?

  • Wannabe investors of any age or stage
  • Experienced investors
  • Readers seeking financial freedom

What’s inside this book?

  • A step-by-step guide for achieving financial freedom
  • Strategies for mastering your money from an award-winning financial adviser and an expert business strategist
  • Real-life success stories from experienced and beginner investors

5 lessons you’ll learn from this book: 

  • How markets behave and how to maintain peace of mind during times of volatility
  • How to chart a personalized course for financial security
  • How to select a financial adviser who prioritizes your own interests
  • How to navigate, select or reject the many types of investments available
  • Why success without fulfillment is the ultimate failure

4 questions this book will answer for you: 

  • What does the financial service industry not want me to know?
  • How can I achieve true fulfillment?
  • Is this a good time for me to start investing?
  • Can I still master my money at a late stage in life?

What people are saying about this book: 

  • “Peter Mallouk’s tour of the financial world is a tour de force that’ll change the way you think about money.” — Jonathan Clements
  • “Robbins is the best economic moderator that I’ve ever worked with. His mission to bring insights from the world’s greatest financial minds to the average investor is truly inspiring.” — Alan Greenspan
  • “Tony is a force of nature.” — Jack Bogle

Your Turn: Have you read The Path? Tell us what you found to be the most valuable advice or benefit of the book in the comments.

The Busy Budgeter

Rosemarie Groner knows what it’s like when your financial aspirations are in conflict with your personality. After all, she’s been there herself.

When Groner left her job as a state trooper to be a full-time mom, her family had spent its way into $30,000 of debt. By her own admission, most of her financial mess could be attributed to the family’s disorganized lifestyle.

“We spent a fortune in groceries,” she writes on her blog, “only to let them rot in the fridge when we got busy and had to eat out. Our sink was always piled high with dishes, making it hard to cook at home, and we tried everything to stop spending so much money only to fail time and time again.”

After lots of frustrating trial and error, Groner and her husband, Jon, finally discovered a strategy for organizing their lives and their finances and pulling themselves out of debt. Through her self-developed 90 Day Budget Bootcamp,  the Groners learned that budgeting and efficient home management cannot be separated. By focusing on improving home management, they successfully paid off $30,000-plus in debt and slashed the family’s annual spending by more than $23,000, all while finding a way to make up for the lost income upon leaving Rosemary Groner leaving her job.

When she had reached her goal, she was so ecstatic with her newly organized home, life and finances, that she launched a blog, The Busy Budgeter, to share all her newly discovered wisdom. The blog exploded and has been visited by 18 million readers since its launch in 2014. Through her insightful posts on all things financial, and her tried-and-true system for home and life organization, hundreds of thousands of followers have pulled themselves out of the paycheck-to-paycheck cycle and have started living financially responsible lives.

The Busy Budgeter focuses on organization and home management, and aids those who find it impossible to create a budget, track monthly expenses and stick to a spending plan. Through Rosemarie Groner’s innovative tips and strategies, the chronically disorganized can learn the secrets of successful home management and budgeting.

Blog visitors can choose from a wide variety of trending posts to read, like How to Play Pickleball: A Budget-Friendly Game and How to Quit a Job You Hate. Topics also include How to Budget; Organization; Easy Meals and Make Money. Tips and tricks are always presented in a down-to-earth language, making for easy reading and almost effortless implementation.

For visitors looking for more intensive training, the free 90 Day Budget Bootcamp is the perfect beginner’s guide toward organized living and budgeting. Participants receive a daily challenge to help them make small yet significant changes in their daily routines.

Groner also offers several paid courses to teach participants how to transform their homes and their budgets with organized, efficient systems.

As she says, “[T]here is absolutely nothing standing between you and a life with less stress, constant money wins instead of fails and a house that you’re excited to come home to.”

Do you want to be an outstanding homemaker and budgeter? Check out Groner’’s blog and follow her on Facebook and Twitter  to learn the Busy Budgeter’s secrets.

Your Turn: Are you a Busy Budgeter follower? Tell us in the comments how you’ve applied the advice in your own life.