A credit card with a 22.9 percent APR does not charge 22.9 percent per year on the stated balance. It charges a daily rate of 22.9 divided by 365, which is 0.063 percent. Then that interest is added to the balance. The next day the same rate applies to the new, larger balance. Over a year, this compounding turns a 22.9 percent stated APR into an effective rate closer to 25.7 percent.
The math on $10,000
Carrying a $10,000 balance at 22.9 percent APR, paying only the minimum required by most issuers (around 2 percent of the balance), you would pay roughly $25,700 in interest over the 30-plus years it would take to clear the debt. Every minimum payment is mostly interest, not principal.
What changes when you pay extra
Every dollar of extra principal payment kills interest forever on that dollar. An extra $200 a month on the same $10,000 balance knocks the payoff timeline from 30 years to about 4 years, and the total interest paid drops from $25,700 to about $2,800. The extra payment is the most reliable double-digit return available to a typical household.