How is credit card interest actually calculated?

Most cards calculate interest using a daily periodic rate applied to your average daily balance. Your APR is divided by 365 to get the daily rate – a 24.99% APR is about 0.0685% per day. Each day, that rate is multiplied by your balance, and the interest is added, so you're charged interest on interest: it compounds daily. At the end of the cycle, those daily charges are summed into your statement interest. This is why carrying a balance is so costly and why the posted APR understates the true cost. The bright spot is the grace period: if you pay your statement balance in full each month, purchases incur no interest at all. Once you carry any balance, though, the grace period often disappears and new purchases start accruing immediately. Paying in full whenever possible is the single best move.