How Does Credit Card Interest Work?

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Credit card interest is dependent on how good the credit is of the person who is using the card. Find out how to avoid large credit card charges associated with bad credit with help from a registered financial consultant in this free video on credit and personal finance.

Part of the Video Series: Credit & Personal Finance
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Video Transcript

This is financial adviser, Patrick Munro talking about how does credit card interest work? A credit card company when they send out an application for credit and you fill it out as a consumer there are various things that go into place ultimately resulting in a credit score. The credit score is looked at and the bank will give you an offer back on your credit card, sometimes if you have excellent credit you can be given 0 percent interest as an opener for about five or six months and then the rate will rise to a level that hopefully is acceptable going forward based on your good credit. If your credit is not good you will be given a credit card but it will have a large credit card charge against it in the form of credit card interest. You should avoid carrying credit card charges of that nature because interest will accrue and you will end up not paying your debt down in a timely fashion because it is all going to interest. The way to get the lowest credit card interest is to make sure that you have the best credit score available so that is mindful and that is a way for you to look at how credit card interest works relative to credit cards. This is financial adviser, Patrick Munro.

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