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Credit Card Interest Calculator
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Credit Card Interest Calculator
Check your credit card balance and interest rate to determine the amount of interest you pay are for a given month.
Written by Paul Soucy Lead Assigning Editor Credit cards, credit scoring, personal financial planning Paul Soucy has led the Credit Cards content team at NerdWallet since 2015. He served as an editor for USA Today, The Des Moines Register and the Meredith/Better Homes and Gardens family of magazines for more than 20 years. He also established a profitable freelance writing and editing practice that focuses on personal and business finances. He was editor of the USA Today Weekly International Edition for six years, and was awarded the top award by ACES: The Society for Editing. He holds a bachelor's degree in journalism as well as a master of Business Administration. He lives in Des Moines, Iowa, with his fiancée, his two sons, and the dog named Sam.
Updated January 25, 2023 at 10:20 AM PST
Written by Kenley Young, Assigning Editor Credit scores, credit cards Kenley Young is the director of daily coverage of credit cards for NerdWallet. Prior to that, he worked as a homepage editor and digital content producer at Fox Sports, and before that a front page editor at Yahoo. He has years of experience in digital and print media, with times as an editor at the copy desk and wire editor as well as an editor of the metro at the McClatchy newspapers chain.
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Interest on credit cards is a regular part of the lives of tens of millions of cardholders however, for many, it's a mystery the exact method by which credit card interest is calculated -- what percentage of the interest rate charged on their card account translates into the finance charge that is displayed on their monthly statement. The credit card interest calculator from NerdWallet can do the math for you.
Begin plugging in numbers, or read below for tips on how to get the most accurate result.
What goes into the calculation of interest on credit cards
How much interest you get charged on a credit or debit card is determined by a number of factors:
Grace period
Let's start with the grace period: If you pay the credit card charge in full on the due date each month, you will never need to pay interest on purchases. Period. You don't really need an interest calculator for your credit card because there's nothing to calculate. Your interest rate .
If you roll over debt from one statement to the next, then interest will apply.
>Learn More:
Average daily balance
If your credit card statement is sent in the mail (or is available online) it displays the total amount of your amount as of the day that ended the billing period. But that balance is not the number used in calculating the interest rate. The key number is your average daily balance throughout the billing period. The card issuer will take the balance of your account each day in that period and adds it all in a single sum, and then divides in the days in the period.
For example, say you had a 30-day statement cycle that began with a $100 balance:
If you made no charges or payments for the full cycle, your average daily balance is $100.
If you were charged $45 on a posting on the 11th day the cycle, and there was there was no other event, your average per day balance will be around $130. (Ten weeks at 100 and then 20 days at $145.)
If you were to have an initial charge of $45 at the end of day 11 the cycle and a $65 charge on the 21st day, your daily average amount would have been $110. (That's the equivalent of 10 days with $100 followed by the same amount of time at $145 for 10 days, then, and finally 10 days at $85.)
Naturally, keeping track of your daily balance is easy if you make only one purchase and one payment per month. But if you are using your credit card regularly through the entire month, the task becomes harder -- and figuring the average daily balance over the entire cycle is an absolute nightmare. We've designed an app that lets you input the amount of your purchases and your payments over the course of a month to calculate the average daily balance
Click HERE to OPEN OUR AVERAGE DAILY BALANCE TOOL
The calculator for interest on credit cards from NerdWallet requires you to input your account balance. Using your average daily balance will produce the most accurate outcome. To approximate the amount, you could use the closing balance on your statement or calculate where your account balance stands during a typical day.
>Learn More:
Rate of interest
The interest rate applicable to the purchases you make on your account will appear upon your account statement each month. Interest rates are given as an annual percentage rate or APR. While the rate stated refers to an annual percentage rate, credit card companies typically charge interest on the basis of a daily. The daily rate is typically 1/365th the rate of annual. If your APR is at, for instance, 18.99%, the daily rate would be about 0.052 percent, which is 1/365th of 18.99%.
Interest on credit cards typically compounds each day. That means the amount paid on day 1 of the period is added to the calculation for day 2, the interest accrued on the day 2 will be added into calculations for the day following and so on.
Each month typically includes the total amount of interest been accrued, as well as any other fees that you've paid as well as a small amount of your principal amount.
Nerdy Tip
A lot of credit cards have different APRs for different balances. The purchase APR is applicable to purchases made with the card, while separate APRs apply to balance transfers and cash advances. When this is the case the issuer determines the total daily averages of balances for purchases, transfers and advances, and then applies the designated APRs to each.
>> > LEARN MORE:
Days of the cycle
Each credit card cycle encompasses about one month of time, but the billing cycles don't align exactly like calendar months. They usually begin in one month and end in the next. The billing cycle is closed on or around the same date the month. The amount of days within the billing period varies between 28 and 31 days. There are a few reasons to this:
Different months have different numbers of days.
Certain issuers might not permit statements to be closed on weekends or on holidays.
Federal regulations require the due date fall on the same date of each month and that you have at least 21 days between the time your statement is due and your due date.
Our credit card interest calculator lets you choose a number of days ranging from 28 to 31. If you're not sure that you're in the right place, 30 days are an acceptable default. Or you can choose as many days in the month of calendar when the cycle began. (For example, if the cycle began in April and ended in May, use 30 since April has the same number of days.)
What's next?
Appendix: How math is used in our examples
What is the math behind this The cycle is 30 days long, with a starting balance of $100
There are no purchases or payment (30 day period at 100 dollars)
30 x $100 = $3,000
Split by the number of days of cycle: $3,000 / 30 = $100
$45 purchase on day 11 (10 10 days for $100 ) and 20 days at $145)
(10 x $100) + (20 x $145) = $1,900 + $2,900 = $3,900
Split by the number of days in cycle: $3,900/30 = $130
A purchase of $45 on the 11th day and $60 payment on the day 21 (10 days at $100, followed by 10 days at $145 and $10 days of $85)
(10 $100) + (10 145) + (10 $85) = $1,000 + $1,450 + $850 = $3,300
Divided by 30 days of cycle: $3,300 / 30 = $110
Author bio Paul Soucy is the chief credit card editor at NerdWallet. He has worked at USA Today and the Des Moines Register and holds an MBA.
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