<prompt> Human: Folks, its dismaying to see the level of misunderstanding about how to use credit cards. This is hardly a secret here in rpersonalfinance, but every day people still ask questions that imply they dont understand how to use their credit card effectively.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 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 havent posted to your account balance yet. Dont worry about those - the only transactions that matter as far as interest goes are the ones included in your Statement Balance. The Minimum Balance is the amount you need to pay to avoid a late payment, but paying only this amount will result in interest being charged. The Current Balance 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.If you are planning on using your credit card the correct way, APR is not a concern for you. If you arent 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.Here is a good example of how to use a credit card: Smart Sue has a 24 APR credit card with a billing cycle from August 01 - September 01. 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. Smart Sue used her card strictly for things she could afford, so she can pay the full 1000 due immediately. 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 AugSept billing cycle.Here is a bad example of how to use a credit card Debtor Dan has a 24 APR credit card with a billing cycle from August 01 - September 01. 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. Debtor Dan didnt use his card strictly for things he could afford, so he can only pay 500 by October 02. 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.Dont 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 theyre a bad idea, credit card debt is not treated with the degree of caution it needs to be treated with.  <response>: Just as an add on: Because your balance may vary from day to day, credit card issuers use different methods to determine the balance that is subject to interest charges. The 2 most common methods are the average daily balance and the adjusted balance:An average daily balance is calculated by adding up each months daily balance and dividing that number by the number of days in the month. This is the method most commonly used by issuers.How your monthly interest charge is calculatedInterest charges are calculated on a monthly basis. Since months vary in length, most credit card issuers use a Daily Periodic Rate DPR to calculate interest charges. The DPR is calculated by dividing the APR by 365. That number is then multiplied by the average daily account balance and by the number of days in the statement billing cycle. Heres the basic formula used to calculate your monthly interest rate:Balance x DPR x days in statement billing cycle interest for that months statement 