Question regarding compound interest – Forums



Could someone please explain how compound interest on a credit card works please?

I have always understood that the interest on the balance is calculated daily and then is capitalised (paid onto balance) on your statement date. It is at this point that the interest starts compounding as you are then accruing interest on that interest daily until it is paid off via your monthly payment.

I have a credit card company that has written to me saying that they calculate interest daily and that interest is added onto my balance which is then compounded.

I’m totally confused now. I thought interest built up in the background and wasn’t compounded till it hit your balance on the statement date?

Any info would be appreciated. Thank you.


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