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Interest Calculator for Credit Cards
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Interest Calculator for Credit Cards
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 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 over 20 years. He also established a profitable freelance editing and writing practice that focuses on personal and business finance. He was editor of USA Today Weekly International Edition for six years, and was awarded the highest distinction from ACES: The Society for Editing. He holds a bachelor's in journalism as well as a master of Business Administration. The family lives in Des Moines, Iowa, with his wife, two sons, and the dog named Sam.
Updated January 25, 2023 10:20AM PST
Edited by Kenley Young, Assigning Editor Credit scores, credit cards Kenley Young directs daily coverage of credit cards for NerdWallet. Previously, he was a homepage editor and digital content producer for Fox Sports, and before that a front page editor at Yahoo. He has decades of experience in both digital and print media, including times as an editor at the copy desk and wire editor as well as an editor of the metro at McClatchy. McClatchy Newspaper chain.
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Interest on credit cards is a monthly fact of the lives of tens of millions of cardholders However, to many, it's unclear the exact method by which credit card interest is calculated -- how the interest rate on the card's account is translated into the finance fee that appears on their monthly statements. NerdWallet's credit card interest calculator can calculate the calculations for you.
Begin plugging in numbers or follow the instructions below for guidance on how to get the most precise result.
What goes into the credit card interest calculation
How much interest you get charged on a credit or debit card is determined by a number of variables:
Grace period
Let's start with the grace period When you pay off your credit card bill in full on the due date each month, you will never need to pay any interest on purchases. Period. You don't need an interest calculator for your credit card because there's nothing to calculate. The interest rate .
If you roll over debt from one account to the following, however, interest will apply.
>> LEARN MORE:
Average daily balance
When you receive your statement from the card arrives through the post (or is available online) it displays the total amount of your balance as it stood on the last day of the period of billing. But that balance is not the number used in calculating your interest charge. The number that matters is the amount you have spent on your daily account during the billing period. The issuer of the card will take the balance on your account for each day during that period and adds it all together, then divides them into the total number of calendar days during the time period.
As an example, suppose you had a 30-day statement cycle that began with a balance of $100:
If you did not make any charges or payments for the entire cycle, your average daily balance would be $100.
If you had a $45 charge posting on the 11th day of the cycle with there was no other event, your average per day balance will be around $130. (Ten days at $100, and 20 days at $145.)
If you had an initial charge of $45 in the eleventh day of the cycle and a $60 charge on the 21st, your daily average total would amount to $110. (That's 10 days at $100, the same amount of time at $145 for 10 days, then, then 10-days at the $85 mark.)
Naturally, keeping track of your daily balance is simple if you make only one purchase and one payment per month. But if you are using your credit card frequently during the course of the month, tracking your balance is much more difficult -- and finding your average daily balance for the entire cycle is a nightmare. We've created an application that lets you enter the amount of your purchases and your payments over the course of a month to calculate your average daily balance:
CLICK to OPEN OUR VERIFYED DAY-TO-DAY BALANCE TOOL
The credit card interest calculator from NerdWallet asks you to enter your balance on your account. The average balance for your day will produce the most accurate result. To approximate the amount you can use the closing balance on your statement or estimate what your balance is in an average day.
>> LEARN MORE:
Interest rate
The interest rate applicable to your purchases will be displayed on your monthly statement. Interest rates are given as an annual percentage rate or APR. Although the stated rate is an annual rate, credit cards generally charge interest on the basis of a daily. The daily rate is typically 1/365th of your annual cost. So if your APR is, say, 18.99%, the daily rate would be about 0.052% that is 1/365th of 18.99 percent.
Credit card interest typically is compounded each day. That means the amount charged for day 1 of the period is added into the calculation for day 2, the interest from the day 2 will be added to the calculation for day 3, and so on.
Each month typically includes all the interest you have accrued, any fees that you've paid and a small percentage of your principal amount.
Nerdy Tip
Some credit cards offer different APRs on different balances. The purchase APR applies to items you purchase using the card, while separate APRs apply to balance transfers and cash advances. If this is the case the issuer of the card calculates different average daily balances for purchases, transfers and advances, and applies the specified APR to each.
>> LEARN MORE:
Days of the cycle
Each cycle of credit card bills is about a month's worth of time. However, billing periods don't line up exactly with calendar months. They typically start in one month , and then end in the next. The billing cycle is closed on or around the same date the month. The number of days in the billing period varies from 28 to 31 days. There are several explanations for this:
Different months have different numbers of days.
Some issuers might not allow statements to close on weekends or on holidays.
Federal regulations mandate that your due date land on the same date of every month, and that you must have at least 21 days between the time your statement closes and the due date.
The credit card interest calculator allows you to select a number of days from 28 to 31. If you're not sure, 30 days is the best option; or you can choose as many days of the calendar month in which the cycle began. (For instance, if a cycle began in April and ended in May, use 30 because April has the same number of days.)
What's next?
Appendix: How the math functions in our examples
What is the math behind this 30 day cycle, beginning balance of $100
No purchases or transactions (30 days for $100)
30 times $100 = $3,000
Divided by 30 days in cycle $30 = $100
Purchase of $45 on day 11 (10 10 days for $100, then $20 days for $145)
(10 10 x $100) + (20 + $145) = $1,000 plus $2,900 equals $3,900
Split by the number of days of cycle: $3,900 / 30 = $130
A purchase of $45 on the 11th day and $60 payment on the day 21 (10 days at $100, 10 days for $145, and finally 10 days at $85)
(10 x $100) plus (10 x $145) + (10 $85) = $1,450 + $1,000 plus $850 equals $3,300.
Split by the number of days in cycle: $3,300/30 = $110
About the author: Paul Soucy is the lead credit cards editor at NerdWallet. He has worked at USA Today and the Des Moines Register and has an MBA.
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