Credit cards charge by the day, not the month.

FICO, by exact weight

FICO publishes the weighting. It looks like this:

Payment history (35%)

One missed payment, reported 30+ days late, can drop a 760 score by 100 points. The damage decays slowly; the entry stays on your report for 7 years. Autopay the minimum on every card. It costs nothing and turns this category into a solved problem.

Utilization (30%)

Credit used / credit available. Both per-card and aggregate matter. A 5% aggregate utilization with one maxed-out card is worse than 5% spread evenly. The sweet spot is under 10% on the statement closing date; anything under 30% is fine.

This is the most actionable lever. If you charge $4,000/month on a card with a $5,000 limit and pay it off in full every cycle, your statement balance still hits 80% utilization. Call to raise the limit, pay the balance before the statement closes, or spread spend across cards. Any of those drop the reported utilization without spending less.

Length of credit history (15%)

Average age of all accounts, plus age of oldest. This is the strongest reason to keep an old card open even if you do not use it. Put a $5 recurring charge on it and autopay so the issuer does not close it for inactivity.

Credit mix (10%) and new credit (10%)

Mix rewards having both revolving credit (cards) and installment credit (auto loan, mortgage, student loan). New credit penalizes opening multiple accounts in a short window. Each hard inquiry costs a few points; the effect fades in about a year.

How APR actually gets applied

Credit cards quote an annual percentage rate, but they charge interest daily. The mechanism:

1. Convert the APR to a daily periodic rate: APR ÷ 365. A 24% APR is a daily rate of about 0.0658%.
2. Compute the average daily balance across the billing cycle (typically 30 days).
3. Multiply: interest = daily rate × average daily balance × days in cycle.

Worked example. $2,000 balance carried for a full 30-day cycle at 24% APR. Daily rate = 0.000658. Interest for the cycle = 0.000658 × 2,000 × 30 = $39. The next cycle starts at $2,039.45, and the interest compounds against the new balance.

The grace period is the rule that you do not pay any interest if you pay your statement balance in full by the due date. Once you carry even $1 of balance into the next cycle, the grace period dies, and on most cards, interest is then applied retroactively from the date of each purchase, not from the statement date. The first time you carry a balance is usually more expensive than the last time.

Snowball vs avalanche, on a sample debt portfolio

You have $1,100/month to put toward debt and four balances:

Snowball: pay minimums on everything, throw the rest at the smallest balance. Avalanche: pay minimums on everything, throw the rest at the highest APR.

Avalanche pays off in 30 months and pays $3,912 in interest. Snowball takes 30 months and pays $3,965. Avalanche saves $53.

The case for snowball is behavioral. Killing the smallest balance first gives you a closed account in month 2, which is the psychological reward that keeps you in the program. If you would actually stick with snowball but quit avalanche after six months, snowball wins because it is the plan you executed.

The minimum-payment trap

Credit card minimums are typically the greater of $25 or 2% of the balance. That percentage is calibrated to barely outpace the interest accruing, so you stay in debt for decades.

$5,000 balance, 22% APR, paying only the 2% minimum (or $25 floor):

Payoff takes 60.0 years and total interest paid is $34,665, more than the original balance. Paying a fixed $200/month instead of the minimum cuts that payoff to about 3 years and interest paid to roughly $1,500.

Refinancing and 0% balance transfers

Most major issuers run 0% APR balance transfer promotions, typically 12 to 21 months, with a 3% to 5% transfer fee. The math is almost always favorable: pay a one-time 4% fee to skip 21 months of 22% interest.

The trap is the back-end. If you are not paid off when the promotional window ends, the standard APR (often 25%+) kicks in on the remaining balance. Some cards charge deferred interest: retroactive interest on the full original balance if any of it is left when the promo expires. Read the offer carefully.

Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn't, pays it. Attributed to Einstein, probably apocryphal but accurate.