 TITLE: How Credit Cards Work CONTENT: How Does Credit Card Interest Work?\n-----------------------------------\nYour credit card's annual percentage rate (APR) indicates how much interest you'll pay on revolving balances—in other words, the balance you carry from month to month if you can't pay it off in full.\nCredit cards have a grace period in between the statement closing date and the due date, and if you pay off your statement balance in full during this time, you won't owe any interest. The length of the grace period varies by issuer, but it's typically around 21 days.\nIf you do carry a balance, you'll have to pay interest. Credit card interest charges are calculated based on your average daily balance, the number of days in your billing cycle and the percentage rate the card issuer applies to the balance.\nBe aware that some cards have different APRs on purchases and balance transfers. Additionally, some cards begin with 0% APR for a set time period and then later switch to a standard APR—this is called an introductory or promotional rate. APRs can be fixed or variable.\nIn addition to repaying your purchases and paying interest fees, you may at some point owe other credit card fees in your bill. For example, if your card has an annual fee, it will be added to your statement balance once a year. You will also typically face fees for returned payments, late payments, exceeding your credit limit as well as interest charges on cash advance and balance transfers. Some credit cards charge foreign transaction fees on purchases made in other countries or in other currencies. END