How it works
How the Credit Card Interest Calculator works
Quick answer: A $5,000 balance at 24.99% APR builds about $102.70 of interest in a 30-day billing cycle. The daily rate is 0.0685%.
Formula
Daily periodic rate = APR ÷ 365
Interest = average daily balance × daily rate × days in cycle
Issuers apply the daily rate to your average daily balance; this calculator uses a constant balance for the cycle.
Worked example
$5,000 × 24.99% ÷ 365 × 30 days = $102.70. Balance plus interest: $5,103.
One 30-day cycle at 24.99% APR
| Balance | Interest this cycle | Open |
|---|
| $1,000 | $20.54 | Open |
| $2,500 | $51.35 | Open |
| $5,000 | $102.70 | Open |
| $10,000 | $205.40 | Open |
| $20,000 | $410.79 | Open |
Assumptions and limits
- Paying the full statement balance by the due date usually avoids interest on purchases (the grace period).
- Cash advances often have a higher APR and no grace period.
Frequently asked questions
How do you calculate interest on a credit card?
Multiply your balance by the APR, divide by 365 to get the daily periodic rate, then multiply by the days in your billing cycle.
What is a daily periodic rate?
Your APR divided by 365. Card issuers apply this rate to your balance for each day of the cycle.
Will paying the minimum avoid interest?
No. Interest keeps accruing on the unpaid balance, which is why carrying a balance gets expensive.
How is credit card interest calculated on cash advances?
Cash advances start accruing interest immediately with no grace period, often at a higher APR than purchases. There is also usually an upfront cash advance fee of 3 to 5 percent.
What is the average daily balance method?
Most issuers use this: they add up your balance at the end of each day in the billing cycle, divide by the number of days to get the average, then multiply by the daily periodic rate and the days in the cycle.
How do I calculate credit card interest for one month?
Take your balance, multiply by your APR, divide by 365, then multiply by the number of days in your billing cycle (usually 30). For example: $5,000 at 24% APR for 30 days is about $98.63 in interest.
Why is my credit card interest higher than expected?
Common reasons: interest compounds daily so the effective rate exceeds the stated APR, you carried a balance past the grace period, or a penalty APR kicked in after a late payment.
Does the grace period apply if I carry a balance?
No. The grace period (usually 21 to 25 days) only applies when you pay your statement balance in full each month. Once you carry a balance, new purchases start accruing interest immediately.
Is credit card interest compounded daily?
Most US issuers compute interest daily and add it to the balance, so unpaid interest can earn interest in later cycles.