What is the amount charged for having any unpaid balance after the due date?

• A. Annual Percentage Rate (APR)
• B. Billing Cycle
• C. Compound Interest
• D. Credit Card Interest

Answer: (D)

When you don’t pay the full balance by the due date on a credit card, you incur a charge for the use of borrowed money on the unpaid portion. This charge is called credit card interest. The amount you owe is determined by the APR, the annual rate used to calculate interest (often applied daily and may compound). The billing cycle is simply the time between statements and doesn’t itself determine the charge. Interest can compound, meaning interest is charged on previously accrued interest as well, which makes what you owe grow faster if you carry a balance. Paying in full by the due date and keeping a grace period (if your card offers one) can help you avoid these interest charges.