Credit cards can build your US credit and earn rewards, or cost you a lot in interest. The difference comes down to one habit: paying the full statement balance each month.
Key terms
- APR: annual percentage rate, the yearly interest charged on balances you carry
- Statement balance: what you owed when your billing cycle closed
- Due date: the deadline for your payment
- Grace period: time between the statement and due date when new purchases don’t accrue interest if you pay in full
- Minimum payment: the smallest amount you can pay without a late fee
How interest is charged
If you don’t pay the full statement balance, interest is usually charged daily on the remaining balance. Rates on many cards are high, so even a small carried balance grows.
Avoid these
- Paying only the minimum
- Cash advances, which often charge fees and interest from day one
- Missing payments, which can trigger penalty APRs and late fees
Set autopay: Choose “statement balance” as your autopay amount, not “minimum payment.”
