Credit card companies charge interest on unpaid balances to make a profit

When a consumer makes a purchase using their credit card, the credit card company pays the merchant on the consumer’s behalf. 

The consumer is then expected to repay the credit card company within the billing cycle. 

If the consumer does not pay the full balance, the credit card company charges interest on the unpaid amount.

Interest rates on credit cards vary depending on the card and the issuer. 

Some credit cards offer lower interest rates than others, and some may offer zero percent interest for an introductory period.  

The interest rate charged by a credit card company is known as the Annual Percentage Rate (APR) 

The APR is the percentage of interest charged on an unpaid balance annually.