The cost of carrying a balance on retail-affiliated credit products significantly impacts the total amount repaid. It represents the annual cost of borrowing expressed as a percentage. For example, a 20% rate on a $1,000 balance, if carried for a full year without payments, would accrue $200 in interest charges.
Understanding this figure is crucial for responsible credit management. A lower figure translates to reduced finance charges and potential savings over time. Historically, these rates have fluctuated with broader economic conditions, often mirroring changes in the prime rate and federal funds rate set by central banking authorities.
