Credit cards work on the basis of compound interest when the user does not pay off the balance each month. Because of this, the cost of interest can accumulate very quickly.
This is the main reason why users should understand the core workings of how interest compounds.
It is also important users include the total cost of interest with purchases for the full and final cost of buying goods, and services.
Frank Conway is a Qualified Financial Adviser and founder of MoneyWhizz.
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