Mastodawn

LemmyKnowsBest Oct 3, 2025

On a credit card, for people struggling unable to pay it off in full every month, what's the difference between "annual percentage rate" and "monthly interest rate" for unpaid balance?

https://lemmy.world/post/36805968

On a credit card, for people struggling unable to pay it off in full every month, what's the difference between "annual percentage rate" and "monthly interest rate" for unpaid balance? - Lemmy.World

For example some credit cards have ridiculous monthly interest like 29.9% While offering a low 0.9% APR. Please explain.

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jeffw Oct 3, 2025

I think you’re mixing it up. Nobody actually gets 30% interest in a month. That’s the APR.

roughly speaking, your monthly interest is 1/12th of the APR.

Edit: payday loans might actually get that high tbh… but that’s a separate issue. Credit card APRs will be around 25-30% most of the time

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LemmyKnowsBest Oct 3, 2025

Oh sweet. So I’m completely debt free at the moment but one of my credit cards just increased the limit and gave me 0.9% APR until March 2026. So would this be a good time for me to max it out 😬? I would easily pay it off within 6 months. I drive a Mercedes, fully paid-off, I own the title, and last month the dealership mechanic quoted me $6,000 in maintenance costs for some little issues to fix to keep it good as new. And I am so tempted to dive in and accept their quote. But I would need to use my credit card to do that. 😬 Wise? Or unwise?

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papertowels

Fully paid off Mercedes suggests you’re good with money and credit cards.

Learning about the nuances of APR suggests you might be learning the ropes.

If you ARE good with finances, consider opening a new CC to leverage the sign up bonus to charge the 6k repair fee too. It’s not uncommon for higher end cards to give $500+ in sign on bonuses. Many will have an annual fee, just product change to a no fee card before it comes dur. .