conversation: User (aBoglehead): "Folks, it's dismaying to see the level of misunderstanding about how to use credit cards.  This is hardly a secret here in /r/personalfinance, but every day people still ask questions that imply they don't understand how to use their credit card effectively.\n\n**Always pay your statement balance in full, every month, without exception.** This is how you turn a miserable 24.99% APR card into a 0% APR card, for free and for no hassle.  The [*Statement Balance*](http://i.imgur.com/w1qUN3u.png) is the amount you need to pay by the *statement due date* in order to avoid charges on interest.  As you get closer to the end of the billing cycle you may notice that pending charges haven't posted to your account balance yet.  Don't worry about those - the only transactions that matter as far as interest goes are the ones included in your Statement Balance.\n\n* The [Minimum Balance](http://i.imgur.com/yMonKKO.png) is the amount you need to pay to avoid a late payment, but paying only this amount will result in interest being charged.\n\n* The [Current Balance](http://i.imgur.com/IWSdP1r.png) is the amount of all the charges that have posted to your account since the beginning of the billing period and when you pay your bill.  Some of the charges included in the Current Balance may be for purchases made after the previous billing cycle ended.\n\nIf you are planning on using your credit card the correct way, APR is not a concern for you.  If you aren't going to use it correctly, and carry a balance past your statement due date, you should seriously reconsider using a credit card for purchasing things.\n\nHere is a good example of how to use a credit card:\n\n* Smart Sue has a 24% APR credit card with a billing cycle from August 01 - September 01.  \n\n* During the month of August she rings up $1000 of charges on her card.  Her statement for August is issued on September 02, and the statement balance of $1000 has a statement due date of October 02.\n\n* Smart Sue used her card strictly for things she could afford, so she can pay the full $1000 due immediately.\n\n* She makes the $1000 the day after her statement is issued, well before the statement due date.  Her statement balance is $0, and she avoids interest for the Aug/Sept billing cycle.\n\nHere is a bad example of how to use a credit card\n\n* Debtor Dan has a 24% APR credit card with a billing cycle from August 01 - September 01.  \n\n* During the month of August he rings up $1000 of charges on his card.  His statement for August is issued on September 02, and the statement balance of $1000 has a statement due date of October 02.\n\n* Debtor Dan didn't use his card strictly for things he could afford, so he can only pay $500 by October 02.  \n\n* He pays the $500 he can afford on October 01.  On October 02, the remaining $500 is assessed interest in the amount of (24% / 12) * $500 = $510.  The unpaid $500 in addition to $10 of interest remain on his statement balance for the next billing cycle.\n\nDon't fall into the habit of carrying credit card debt.  It can destroy your finances very quickly and, unlike payday loans (that even those who take one out seem to realize they're a bad idea), credit card debt is not treated with the degree of caution it needs to be treated with."
  Self: "It honestly never would've crossed my mind to do it differently. "
  