How interest on credit cards works
Credit cards can be a smart way to manage your money. They make it easy to track your spending and can be more convenient, and safer, than carrying cash. Just make sure you know when you have to pay interest and when you donít.
Once the interest starts to grow, it can be hard to catch up. And when you pay off part of your balance, the payment goes to interest first.
Alan fell into the interest trap when he bought his new TV. See why he ended up paying $1,000 more Ė and how he could have avoided those extra costs. Read Why pay more? Alanís story
When you wonít pay interest:
If you pay back what you owe every month, you wonít pay interest. Instead, you get a grace period
between when you buy an item and when you have to pay for it. This can really help if you're temporarily short of cash Ė like a few days before you get paid, or while waiting for your income tax refund. And if you have the money when you use the card, you can leave it in your bank account and earn a bit of interest until you pay off your bill.
Did you know? Only 54% of Canadians pay off their Visa and Mastercard balances in full each month.