when credit card shows periodic rate and annual percentage rate am i charged both or how does that work?

when credit card shows periodic rate and annual percentage rate am i charged both or how does that work? Is the periodic rate just in case i pay off balance before month ends? Please explain.. thanks

By | 2013-08-28T07:21:14+00:00 August 28th, 2013|Mortgages Home Loans Interest Rate|2 Comments

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  1. clock August 28, 2013 at 7:50 AM - Reply

    HI Rodney,

    This is just my opinion. Pay off your credit card each month. If you cannot afford to do that than you are living beyond your means and you will pay dearly.

  2. R T August 28, 2013 at 7:48 AM - Reply

    The periodoic rate is the rate you are charged for the specific period (usually a daily rate). Since credit cards are compound interest, meaning that you are charged interest on the total balance including any accumulated interest, then the actual rate is higher. The annual rate is the effective rate over the course of a year (all the periodic rates added up for a year).

    So, lets say the daily periodic rate is 0.02532%. You get charged 0.02532% each day. If you got charged this every day for a year it would end up being an annual percentage rate (APR) of 9.24%. If you pay the balance off by the due date, you are not charged interest.

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