Understanding Credit Card Dynamics Credit cards are powerful financial tools, offering convenience and flexibility for everyday purchases, travel, and emergencies. However, without careful management, they can lead to mounting debt due to high interest rates. In 2025, with rising costs and evolving financial landscapes, understanding how credit card interest works is crucial for maintaining financial health. Credit card interest on interest , also known as compound interest, can significantly increase debt if balances are not paid in full. By grasping these mechanics and exploring smarter options, consumers can make informed decisions to keep their finances in check. The Trap of Compound Interest Credit card interest on interest occurs when unpaid interest is added to the principal balance, and new interest is calculated on this larger amount. This compounding effect can quickly escalate debt, especially for those who only make minimum payments. For example, a card with a 2...