Interest rates are a critical concept in credit cards, yet many cardholders overlook how they work. When you carry a balance from one month to the next, the credit card issuer charges interest, usually expressed as an Annual Percentage Rate (APR). The APR is not the monthly charge but rather the yearly rate, broken down into daily calculations. For example, an APR of 18% means the daily rate is about 0.049%. Interest is charged on your average daily balance, so even carrying a partial balance for a short period can increase costs. Some cards offer introductory 0% APR periods to entice new customers, often on purchases or balance transfers, but these revert to standard rates after the promo ends. Understanding how APR works is essential to making credit cards a helpful tool rather than an expensive liability.