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(image: https://i.pinimg.com/originals/1a/b9/5e/1ab95eda19f9ff89050f3ec65710ca68.png)Credit Card Interest Calculator
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Interest Calculator for Credit Cards
Use the balance on your credit card and interest rate to figure out how much your interest charges would be for a month.
The author is Paul Soucy Lead Assigning Editor Credit scoring, credit cards, personal financial 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 editing and writing business that focuses on personal and business finance. He served as editor of the USA Today Weekly International Edition for six years and won the highest award from ACES: The Society for Editing. He holds a bachelor's in journalism, as well as a Master of Business Administration. He lives in Des Moines, Iowa, with his wife, two sons, and an animal named Sam.
Updated January 25, 2023 at 10:20 AM PST
Written by Kenley Young, the Assigning Editor Credit score, credit cards Kenley Young oversees the daily coverage of credit cards on NerdWallet. Prior to that, he worked as a homepage editor and digital content producer for Fox Sports, and before that , a front page editor for Yahoo. He has decades of experience in digital and print media, with stints as an editor at the copy desk as well as a wire editor, and a metro editor of McClatchy. McClatchy newspapers chain.
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Interest on credit cards is a regular part of the lives of tens of millions of credit card holders however, for many, it's a mystery exactly how credit card interest is calculated. It's not clear what percentage of the interest rate charged on the card's account is translated into the finance fee that is displayed on their monthly statements. NerdWallet's credit card interest calculator will calculate the math for you.
Start plugging in numbers, or check below for guidance on how you can get the most precise result.
What is the basis for the calculation of the interest rate on credit cards
The amount of interest charged on a credit or debit card is determined by a number of elements:
Grace period
Let's start by introducing the grace time: If you pay the credit card charge in full by the due date each month, you'll never have to pay interest on purchases. Period. There's no need for a credit card interest calculator because there's nothing to calculate. Your interest rate .
If you roll over debt from one statement to next, then interest will accrue.
>> LEARN MORE:
Average daily balance
If your credit card statement arrives in the mail (or is posted online) it displays the total amount of your amount as of the day that ended your billing cycle. But this isn't the amount used to calculate the interest charged. The number that matters is the average daily balance in the period of billing. The credit card company determines the balance on your account for each day in this period. They add them together, then divides them by the number of days during the period.
As an example, suppose you had a 30-day statement cycle and started with a $100 balance:
If you did not make any charges or payments for the whole cycle, your average daily balance would be $100.
If you had a charge of $45 posting on the 11th day the cycle, and there was no other activity, your average per day balance will be around $130. (Ten days of $100, and the following 20 days would be $145.)
If you were to have a $45 charge at the end of day 11 the cycle and a $65 charge on the 21st day, your average daily total would amount to $110. (That's the equivalent of 10 days with $100 followed by 10 days at $145, then 10 days at $85.)
Naturally, keeping track of your daily balance is easy in the case of one purchase and only one payment each month. But if you are using your credit card frequently throughout the month, it's more difficult -- and finding the average daily balance for the entire cycle can be a nightmare. We've developed an app that lets you input the amount of your purchases and your payments over the course of a month to determine the average daily balance
CLIKE to OPEN OUR VERIFYED DAY-TO-DAY BALANCE TOOL
NerdWallet's credit card interest calculator requires you to input your account balance. Averaging your daily balance will produce the most accurate outcome. For a ballpark figure you can use the closing balance shown on your statement, or guess what your balance is on the typical day.
>> LEARN MORE:
Rate of interest
The interest rate applied to the purchases you make on your account will be displayed on your monthly statement. The interest rates are stated as an annual percentage rate, or APR. Although the stated rate refers to an annual percentage rate, credit card companies generally charge interest on an ongoing basis. The daily rate is typically 1/365th the rate of annual. If your APR is at, for instance, 18.99%, the daily rate is around 0.052% that is 1/365th of 18.99 percent.
Interest on credit cards typically compounds daily. That means the amount charged for day 1 of the period is added to calculate the day 2, and the interest accrued on day 2 is added to calculations for the day following, and so on.
The monthly bill typically comprises all the interest that has been accrued, the fees you have incurred and a small percentage of your principal amount.
Nerdy Tip
Many credit cards charge different APRs on different balances. The purchase APR applies to things you buy with the card, while different APRs are charged for cash advances and balance transfers. When this is the case, the card issuer determines the average daily balances for transfers, purchases and advances, and applies the specified APR to each.
>Learn More:
Days in the cycle
Each cycle of credit card bills covers about one month's worth of time, but billing periods don't line up exactly like calendar months. They usually begin in one month and end within the following month. The billing cycle is closed on or around the same date each month. The amount of days within the billing cycle varies, usually between 28 and 31 days. There are several reasons for this:
The different months have different numbers of days.
Some issuers might not allow statements to close on holidays or weekends.
Federal regulations require you to have your date of due fall on the same date of each month . You must also have at least 21 days between when your statement closes and your due date.
Our calculator for interest on credit cards lets you select a range of days between 28 and 31. If you're not sure which day to choose, 30 days is an acceptable default. Or you can choose to choose the days of the calendar month in which the cycle began. (For example, if the cycle began in April and concluded in May use 30 since April is a month with the same number of days.)
What's next?
Appendix: How math works in our examples
The maths behind it 30 day cycle, beginning balance of $100
No purchases or payments (30 day period at 100 dollars)
30 x $100 = $3,000
Divided by 30 days in cycle $30 = $100
A purchase of $45 on the 11th day (10 ) days of $100, followed by 20 days at $145)
(10 100) + (20 ) x $145) = $1,900 * $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 on day 21 (10 days at $100, followed by 10 days for $145 and the 10th day at $85)
(10 x $100) (10) + (10 x $145) + (10 x $85) = $1,450 + $1,000 + $850 = $3,300
Divided by 30 days of cycle: $3,300 / 30 = $110
About the author: Paul Soucy is the principal credit card editor for NerdWallet. He has worked at USA Today and the Des Moines Register and has an MBA.
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