Credit Card Interest Calculator Advertiser disclosure You’re our first priority. Each every time. We believe that everyone should be able make financial decisions without hesitation. While our website doesn’t contain every company or financial product that is available We’re pleased that the advice we provide, the information we provide and the tools we create are impartial, independent simple, and free. So how do we make money? Our partners pay us. This may influence which products we write about (and the way they appear on our website), but it in no way affects our advice or suggestions which are based on many hours of study. Our partners cannot promise us favorable ratings of their goods or services. . Credit Card Interest Calculator Calculate the balance on your credit card as well as the interest rate to determine the amount of interest you are for the month. By Paul Soucy Lead Assigning Editor Credit cards credit scoring 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 developed a highly successful freelance writing and editing practice that focuses on personal and business finances. He was editor of USA Today Weekly International Edition for six years and won the highest distinction from ACES: The Society for Editing. He has a bachelor’s degree in journalism as well as a master of Business Administration. He lives in Des Moines, Iowa, with his fiancee, his two sons, and a dog named Sam. Jan 25, 2023 edited by Kenley Young Assigning Editor | Credit cards, credit scores Kenley Young directs daily credit coverage of credit cards for NerdWallet. Previously, he was an editor of the homepage and digital content producer for Fox Sports, and before being a front-page editor for Yahoo. He has decades of experience in both digital and print media. This includes stints as the chief of the copy desk, a wire editor and a metro editor for The McClatchy newspaper chain. Email:
. Many or all of the products we feature are made by our partners, who pay us. This influences which products we write about and where and how the product is featured on a page. However, it does not affect our assessments. Our views are entirely ours. Here is a list of and . Interest on credit cards is a regular part of life for millions of cardholders however, to many, it’s a mystery what exactly the method by which interest on credit cards is calculated. It’s not clear how the interest rate on their account is reflected in the amount of finance charged on their monthly statement. The calculator for credit card interest on NerdWallet can calculate the calculations for you. Start plugging in numbers, or check out the following for tips on how to achieve the most precise result. What is the basis of the calculation of interest on credit cards? The amount of interest paid on a credit card is determined by a variety of elements The Grace Period Let’s begin by examining the grace period. When you make sure to pay the credit card in full by the due date each month, you’ll never have the expense of paying interest for your purchases. Period. You don’t really need an interest calculator for credit cards since there’s no way to determine. The interest rate . If you roll debt over from one statement to the next there is a chance of interest accruing. Learn more The average daily balance is displayed when the credit card bill arrives through the post (or is made available online) it displays the balance total as it stood on the day that ended each billing time. However, this isn’t the number used in calculating the interest rate. The number that matters is your daily average balance throughout the billing period. The issuer of your card will take the balance on your account for every day of that period and adds it together, then divides them by the days of the period. For example, say you had a 30 day statement cycle, and you started with an account balance of $100. If you did not make any charges or payments during the entire cycle, your daily balance is $100. If you had a $45 charge made in the morning of the 11th day and there was no other activity, your average daily total would amount to $130. (Ten days at $100, then twenty days of $145.) If you were to have a $45 charge in the eleventh day the cycle, and you made a $60 payment on the 21st, your average daily balance would be $110. (That’s $10 days of $100 followed by the same amount of time at $145, and finally the 10th day at $85.) Of course, keeping track of the balance of your account daily is straightforward if you make only one purchase and one payment every month. However, if you are using your credit card regularly through the entire month, the task becomes much more difficult — and finding the average daily balance over the entire month is difficult. We’ve created an instrument that lets you to record your purchase and payment information during the course of a month to determine your daily average balance: Click here to OPEN our average daily balance TOOL. NerdWallet’s credit card’s interest calculator will ask you to enter your balance on your account. Averaging your daily balance will produce the most accurate results. To get a rough estimate, you could use the balance of your account that is shown on your statement, or calculate where your account balance stands in a typical day. Learn more: Interest rate The interest rate applied to the purchases you make on your account will be printed on your monthly statement. The interest rates are listed in terms of annual percentage rates (also known as an APR. Although the rate listed refers to an annual percentage rate, credit card companies usually charge interest on an ongoing basis. The daily rate is typically 1/365th of your annual cost. So if your APR is like, say, 18.99%, the daily rate is approximately 0.052 percent, which would be 1/365th 18.99 percent. The interest on credit cards generally compounds daily. It means the interest charged on the first day of the time period is incorporated to calculate the day 2. Then, the interest from day 2 is added to the calculation for day 3 and the cycle continues. The monthly bill typically includes all the interest you have accrued, any charges you’ve incurred, and a small amount of your principal balance. The good news is that many credit cards charge different APRs on different balances. The purchase APR applies to items you purchase using the card, while separate APRs apply to balance transfer and cash advances. In the event of this, the card issuer determines the average daily balances for purchases, transfers and advances using the specific APRs to each. Find out more about Days in the cycle cycle of billing for credit cards covers about one month’s worth of time, however the dates of billing don’t coincide precisely with calendar months. They usually begin in one month and end within the following month. The billing cycle is closed at or close to the same date every month. The length of the billing period is different, usually between 28 and 31 days. There are a few reasons to this There are different months with different number of days. Certain issuers may not allow statements to be closed on holidays or weekends. Federal regulations demand the due date fall on the same day every month, and that you must have at least 21 days between when the statement expires and the date you have to pay. The credit card interest calculator allows you to select a number of days from 28 to 31. If you’re not certain that you’re in the right place, 30 days are the best option; or you can use as many days in the month that the calendar year in which the cycle began. (For example, if a cycle began in April but was completed in May go with 30 because April is a month with 30 days.) What’s next? Appendix: How math works in our examples What math is involved 30-day cycle with a start with $100 balance. There are no purchases or payments (30 days of $100) 30 x $100 = $3,000 Divided by 30 days of the cycle $3000 x 30 = $100 $45 purchase on day 11. (10 days of $100, then 20 at $145), 20 days at $145) (10 $100) + (20 $145) = $1,000 + $2,900 = $3,900 divided by 30 days of cycle: $3,900 / 30 = $130 $45 on day 11 and $60 payment on day 21 (10 Days at $100 $10 days of $145 and then 10 days at $85) (10 x 100) + (10 + $145) + (10 $85) = $1,000 + $1,450 + $850 = $3,300 Divided by 30 days in a cycle 3300 x 30 = $110 About The author’s name: Paul Soucy is the chief credit card editor at NerdWallet. He has worked at USA Today and the Des Moines Register and has an MBA. In a similar vein… Find the perfect credit card for you. Whether you want to pay lower interest or earn reward points, the right card is out there. Just answer a few inquiries and we’ll be able to narrow your results for you. Dive even deeper in credit Cards Discover more intelligent money moves – straight to your inbox Sign up and we’ll email you Nerdy content on the money topics that are important to you as well as other methods to help you make the most out of your money. 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