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Message: <blockquote data-quote="kenjib" data-source="post: 498087" data-attributes="member: 530">$2000 balance + $20 finance charge = $2020 balance.$2020 balance - $25 payment = $1995 balance.When they present you your balance when you get your statement, the finance charge (interest) has already been applied.  So, yes, the balance decreases by the amount of your payment, but before you see your balance in the first place, the finance charge has already been added on.  Furthermore, they usually calculate your monthly payment so that the majority of it is sucked up by the finance charge and you don't really pay down much of your principle at all.  Keeping your card always maxxed out is not the best thing to do.  You are throwing the money you spend on charges down the toilet, which is usually around 12.99% of your balance per year.</blockquote>