How do amortization schedules work and when are they used?
Amortization is the process by which your loan balance decreases over time. For both mortgages and credit card balances, your interest charges are based on what you owe.  The calculation of the balance is a little different, but it still is based on what you owe. You're observing correctly that most of the first payments on a mortgage are interest.  This stands to reason since an amortization schedule (for a fixed-rate mortgage) is constructed on the assumption that you're making your payments equally over the course of the mortgage.  Since you owe more at the beginning, you accrue more interest, and a larger fraction of your payment is interest.  Near the end, you owe little, and most of your payment, therefore, is principal.