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Credit Card Interest Calculator
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Credit Card Interest Calculator
Utilize your credit card balance and interest rate to see what your interest costs would be for a month.
The author is Paul Soucy Lead Assigning Editor Credit scoring, credit cards, personal finance Paul Soucy has led the Credit Cards content team at NerdWallet since 2015. He worked as an editor at USA Today, The Des Moines Register and the Meredith/Better Homes and Gardens family of magazines for more than 20 years. He also built a successful freelance writing and editing practice with a focus on business and personal finance. He served as editor of the USA Today Weekly International Edition for six years and won the most prestigious distinction of the year from ACES: The Society for Editing. He holds a bachelor's in journalism, as well as a Master of Business Administration. His home is in Des Moines, Iowa, with his wife, two sons, and an animal named Sam.
Updated Jan 25, 2023 at 10:20 am PST
Written by Kenley Young, Assigning Editor Credit score, credit cards Kenley Young oversees the daily credit cards coverage for NerdWallet. Previously, he was a homepage editor and digital content producer at Fox Sports, and before that , a front page editor for Yahoo. He has a wealth of experience in digital and print media. This includes periods as a copy desk chief, a wire editor and an editor of the metro of the McClatchy newspaper chain.
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Interest on credit cards is a part of daily life for tens of millions of credit card users, but to many, it's a mystery exactly how credit card interest is calculated. It's not clear how the interest rate on the account of their credit card is translated into the finance fee that is displayed on their monthly statements. The credit card interest calculator from NerdWallet can do the calculations for you.
Start entering numbers, or check below for more information on how to obtain the most accurate result.
What goes into the calculation of interest on credit cards
The amount of interest charged on a credit card will be determined by a number of factors:
Grace period
Let's begin with the grace period If you pay the credit card charge in full by the due date every month, you won't have to pay any interest on your purchases. Period. You don't need an interest calculator for your credit card because there's nothing to determine. Your interest rate .
If you roll debt over from one account to the next, though, interest will accrue.
>Learn More:
Average daily balance
If your credit card statement arrives in the mail (or is available online) it will show your total balance at the last day of the billing period. But that balance is not the number that is used to calculate the interest rate. The most important number is your average daily balance in the period of billing. The issuer of the card will take the amount of your account's balance for each day during that period and adds it in a single sum, and then divides by the number of days in the time period.
For example, say you had a 30 day statement cycle, and you started with a $100 balance:
If you made no charges or payments throughout the full cycle, the average daily balance would be $100.
If you had a charge of $45 posted on the 11th day of the cycle, and there was you did not have any other event, your average per day balance will be around $130. (Ten days of $100 and then twenty days of $145.)
If you made a $45 charge at the end of day 11 the cycle and a $60 installment on 21st day, your daily average balance would be $110. (That's 10 days at $100, followed by the same amount of time at $145 for 10 days, then and then 10 days at $85.)
Of course, tracking your balance on a daily basis is simple when you only make one purchase and only one payment each month. But if you are using your credit card on a regular basis throughout the month, it's a lot harder -- and figuring the average daily balance over the entire cycle can be an absolute nightmare. We've created an application that lets you enter your transactions and purchases over the course of a month to determine the average daily balance
CLICK to OPEN OUR AVERAGE DAILY BALANCE TOOL
The credit card interest calculator from NerdWallet requires you to input your balance on your account. Using your average daily balance will produce the most accurate results. For a ballpark figure, you could use the balance at the close on your statement, or estimate what your balance is on a typical day.
>> > LEARN MORE:
Interest rate
The interest rate that applies to purchases on your account will be displayed on your monthly statement. Rates of interest are listed in the form of an annual percentage rate (also known as APR). Although the stated rate is an annual rate, credit cards generally charge interest on an ongoing basis. The daily rate is usually 1/365th of the annual rate. Therefore, if your APR was, say, 18.99%, the daily rate is around 0.052 percent 1/365th of 18.99%.
The interest on credit cards usually increases every day. The interest paid for day 1 of the period is incorporated into the calculation for day 2, the interest from the day 2 will be added into that calculation on day 3 and so on.
Each month typically includes the total amount of interest been accrued, the fees you have incurred and a small percentage of the principal balance.
Nerdy Tip
A lot of credit cards have different rates for different balances. The purchase APR is applicable to purchases made with the card, while different APRs are charged for balance transfers and cash advances. If this is the situation, the card issuer calculates different monthly average balances on balances on transfers, purchases and advances, and applies the specified APRs to each.
>> LEARN MORE:
Days in the cycle
Each cycle of credit card bills encompasses about one month of time. However, the dates of billing don't coincide precisely with calendar months. They generally begin with one month and close in the next. The billing cycle is closed on or about the same day of each month. The number of days in the billing cycle varies between 28 and 31 days. There are a few reasons for this:
Different months have different numbers of days.
Some issuers might not allow statements to be closed on holidays or weekends.
Federal regulations mandate you to have your date of due fall on the same date of each month and that you are allowed at least 21 calendar days between the time your statement ends and your due date.
The credit card interest calculator lets you choose a number of days from 28 to 31. If you aren't sure that you're in the right place, 30 days are the best option; or you could use the number of days in the calendar month that the cycle began. (For example, if the cycle started in April but concluded in May choose 30 because April has thirty days.)
What's next?
Appendix: How math functions in our examples
The maths behind it: 30-day cycle, starting with a balance of $100.
No purchases or transactions (30 days at $100)
30 100 = $3,000
Divided by 30 days in a cycle $30 = $100
Purchase of $45 on day 11 (10 10 days for $100 ) and $20 days for $145)
(10 100) + (20 x $145) = $1,000 * $2,900 is $3,900.
Split by the number of days of the cycle: $3,900 / 30 = $130
A purchase of $45 on the 11th day and $60 payment on the day 21 (10 days at $100, then 10 days at $145, then $10 days of $85)
(10 $100) + (10 145) + (10 $85) = $1,000 + $1,450 plus $850 equals $3,300.
Split by the number of days of cycle: $3,300 / 30 = $110
About the author: Paul Soucy is the chief credit card editor at NerdWallet. He has previously worked for USA Today and the Des Moines Register as well as having an MBA.
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