Credit cards, honestly

The one rule: pay the full statement balance every month. Everything else is detail.

How credit cards work

You borrow from the issuer up to a credit limit. Each month you get a statement summarising purchases. If you pay the full statement balance by the due date, you owe no interest. If you don't, interest accrues at rates typically between 18–29% APR — one of the most expensive consumer debts available.

The grace period

The grace period is the gap between the statement date and the due date — typically 21–25 days. If you pay in full during that window, purchases from that statement earn no interest. Carry any balance forward and the grace period disappears until you pay in full again.

How interest is charged

Most cards use average daily balance × daily rate. Because the daily rate is the APR / 365, and it's applied to each day's balance, a partial payment doesn't fully stop interest — it only slows it.

Are rewards worth it?

1–2% cashback is real if — and only if — you pay in full every month. The average cardholder pays more in interest than they earn in rewards. If you sometimes carry balances, use a no-frills low-APR card instead of chasing points.

The four traps to avoid

1. Minimum payments — designed to keep you in debt for years. Ignore the suggested minimum and pay in full.
2. Cash advances — no grace period, higher APR, plus a fee. Avoid entirely.
3. Balance transfers — useful for consolidating, but read the fee (usually 3–5%) and the promo end date.
4. Store cards — headline discount, sky-high APR. Only worthwhile if you always pay in full.