Compound interest on credit cards means that if the credit card bill is not paid off, interest will accrue on the balance owed, and these interests will be accumulated into the next bill, thus forming compound interest. Different from ordinary interest, compound interest does not only calculate the interest rate on the principal, but is calculated on the principal plus the previous interest, so the amount of debt will continue to increase.

Since credit card compound interest will continue to accumulate, users should pay attention to the minimum monthly repayment amount if the bill has not been paid, so as to prevent the debt from continuing to accumulate. At the same time, if you want to avoid the impact of compound interest, you must pay off the debt in time, or pay off a certain percentage of the debt before each bill settlement date. Otherwise, the interest costs borne will become larger and larger.

It should be noted that even a small amount of arrears may generate compound interest, so users should maintain a good credit record and avoid excessive arrears. At the same time, for credit cards, the most effective way is to repay on time and keep the bill clear. This can avoid the negative impact of compound interest and improve your credit rating.