Credit Card Interest Calculator
A credit card interest calculator finds one billing cycle's interest by dividing your annual percentage rate (APR) by the days in the year, then multiplying that daily rate by your average daily balance and by the number of days in the cycle. Enter your starting balance, APR, cycle length and 365- or 360-day basis in the calculator above. You can also add a payment made during the cycle and the day it posts. The calculator then shows the daily periodic rate, the average daily balance, the yearly cost if the balance stays flat, and the effective annual rate with daily compounding.
For example, take a $5,000 balance at 24% APR with no payment during the cycle. The cycle runs 30 days, and the daily rate uses a 365-day year. That gives a daily rate of 0.0658%, an average daily balance of $5,000, and interest of $98.63 for the cycle. If a $1,000 payment posts on day 11, interest for the same cycle drops to $85.48. That payment saves $13.15 compared with paying nothing during the cycle.
How it works
The daily periodic rate is your APR divided by the number of days in the year your card issuer uses. At 24% APR on a 365-day year, the daily rate is 0.0658%. Some issuers divide by 360 instead, which raises the daily rate to 0.0667%. On the same $5,000 balance, that lifts one cycle's interest from $98.63 to $100.00. Set the day-count input to match the basis printed on your statement.
The average daily balance is the average of each day's balance across the billing cycle. The calculator uses the full balance until your payment posts and the reduced balance from that day on. Take the same $5,000 balance with a $1,000 payment that posts on day 11 of the cycle. The balance sits at $5,000 for the first 10 days. It sits at $4,000 for the remaining 20 days, which averages out to $4,333.33. Every day after the payment counts at the lower balance, so the same payment posted earlier in the cycle pulls the average down further.
Interest for the cycle equals the average daily balance times the daily rate times the days in the cycle. With no payment, the average daily balance stays at $5,000 and the daily rate is 0.0658%. Over 30 days, that comes to $98.63. With the day-11 payment, the same math on $4,333.33 gives $85.48. The calculator reports the $13.15 difference as the interest that payment saves.
The calculator also shows what your APR costs over a full year if the balance stays flat. Held flat for a year, the $5,000 balance costs $1,200 in simple interest. When interest compounds daily, each day's interest joins the balance and is charged interest itself. The effective annual rate then works out to 27.11%, above the 24% APR. The formula is one plus the daily rate, raised to the power of the days in the year, minus one.
The calculator covers purchase interest only. It leaves out any grace period, fees, cash advances and new purchases. Issuers also differ in how they compound within a cycle and how they round, so your statement can come in slightly off the figure above. Use the APR, cycle length and day-count basis shown on your statement, since the defaults in the calculator are placeholders. To pay a balance down, use the credit card payoff calculator. To judge the rate itself, read what counts as a good APR for a credit card.
Frequently asked questions
How do I calculate my credit card interest?
Divide your APR by the days in the year to get the daily rate, multiply it by your average daily balance, then multiply by the days in the billing cycle. Take a $5,000 balance at 24% APR. Over a 30-day cycle on a 365-day year, it is charged $98.63. Enter the figures from your own statement in the calculator above to get your number.
How much interest will a $5,000 balance cost in a month?
At 24% APR, a $5,000 balance is charged $98.63 in one billing cycle. That assumes a 30-day cycle, a 365-day year and no payment during the cycle. On a 360-day basis, the same cycle costs $100.00. A different APR changes the figure, so enter your own rate above.
What is the daily periodic rate?
The daily periodic rate is your APR divided by the days in the year. At 24% APR on a 365-day year, it is 0.0658% a day. On a 360-day year, the same APR gives 0.0667% a day.
What is the average daily balance?
The average daily balance is the average of each day's balance across the billing cycle. A payment lowers it from the day the payment posts. Start with $5,000 and post a $1,000 payment on day 11. Across a 30-day cycle, the balance averages $4,333.33.
Does paying early in the billing cycle lower my interest?
Yes. A payment lowers the balance for every remaining day in the cycle, so an earlier payment means a lower average daily balance. On a $5,000 balance at 24% APR, a $1,000 payment posting on day 11 drops the cycle's interest to $85.48. That is $13.15 less than the $98.63 charged with no payment.
Why is the effective annual rate higher than my APR?
When interest compounds daily, each day's interest is added to the balance and then charged interest itself. At 24% APR, daily compounding over a 365-day year gives an effective annual rate of 27.11%. Simple interest on a flat $5,000 balance comes to $1,200 for the year.
Why does my statement show a slightly different amount?
Some issuers divide the APR by 365 days and some by 360. On the $5,000 example, that difference is $98.63 versus $100.00 for one cycle. Issuers also differ in how they compound within a cycle and how they round, which can shift the statement amount slightly. Set the day-count input to the basis on your statement to get closer.
Does this calculator include a grace period or fees?
No. It covers purchase interest only, with no grace period, fees, cash advances or new purchases. To pay a balance down, use the credit card payoff calculator.