How to calculate credit card interest: calculator and formula
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To calculate credit card interest, divide the APR by 12 for the monthly rate and multiply it by the balance. $5,000.00 at 24.99% APR is $5,000.00 × 24.99% ÷ 12 = $104.13 a month. Issuers usually charge daily: APR ÷ 365 × each day's balance, about $3.42 a day here. Or enter a balance, an APR and a monthly payment below to get the months until the balance is clear and the total interest you pay. Neither charge hits new purchases while you pay the statement in full and keep the grace period.
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Monthly interest = balance × (APR / 12), rounded to the cent. The payment covers that interest first. Whatever is left reduces the balance. Payoff months are how many times that step runs until the balance is zero, and total interest is the sum. If the payment does not cover the interest, the balance does not clear. This monthly estimate is not the average daily balance method (APR / 365 on each day's balance). Nothing leaves your browser.
How credit card interest is calculated, step by step
Most issuers charge interest daily on your average daily balance. The CFPB puts it this way: "Many credit card companies calculate the interest you owe daily, based on your average daily account balance," and "The interest charged daily is called the daily periodic rate" (CFPB, how is the interest calculated on my credit card, re-opened 27 October 2026). The formula is: interest = average daily balance × (APR ÷ 365) × days in the billing cycle.
- Find the purchase APR and the number of days in the billing cycle on your statement. Cash advances and balance transfers can carry different APRs, and the statement must show each balance type with its own rate.
- Turn the APR into a daily periodic rate: APR ÷ 365. A few issuers divide by 360; your card agreement says which.
- Write down the balance at the end of each day in the cycle. Each payment lowers it from the day it posts, and each new purchase raises it if you have already lost the grace period.
- Average those daily balances: add balance × days for each stretch, then divide by the days in the cycle. That is the average daily balance.
- Multiply the average daily balance by the daily periodic rate and by the days in the cycle. The result is that cycle's interest charge.
- Compare it with the interest line on your statement. If yours is a few cents higher, your issuer probably compounds daily, adding each day's interest to the next day's balance, as the CFPB key terms describe.
$5,000.00 × 0.068466% × 30 days = $102.70. With no payments or purchases, the average daily balance is simply the balance.
($3,000 × 15 + $2,500 × 16) ÷ 31 = 85,000 dollar-days ÷ 31 = $2,741.94. Then $2,741.94 × 0.068466% × 31 days = $58.20. The same $500 paid on day 2 instead would cut the average, and the interest, further: the earlier a payment posts, the fewer days the larger balance is charged.
($1,200 × 20 + $1,600 × 10) ÷ 30 = 40,000 dollar-days ÷ 30 = $1,333.33. Then $1,333.33 × 0.054767% × 30 days = $21.91. Because a balance was already carried, the new purchase has no grace period and is charged from the day it posts.
These are illustrative APRs and balances, not any issuer's rate. Interest is rounded to the cent and ignores daily compounding, so a statement can differ by a few cents.
If you paid last month's statement balance in full and on time, new purchases usually carry no interest at all: the CFPB notes that with a grace period "you can avoid paying interest on purchases if you pay off your balance in full by the due date each month." See what is a grace period on a credit card.
The calculator above uses the simpler monthly formula (balance × APR ÷ 12) to count payoff months; the daily method here is what a single statement charges. The day-by-day version of the same method is in how average daily balance interest works.
How the number is worked out
The daily periodic rate is the APR divided by 365. Some issuers use a 360-day basis, which makes each day marginally more expensive; CardLab supports both.
The rate applies to the balance on each individual day, so a purchase on day 2 is charged for more days than the same purchase on day 28. How average daily balance interest works shows that sum on a 30-day cycle, where moving one payment changes the interest.
The payoff box uses a simpler monthly formula, not that daily sum. Monthly interest equals the balance times the APR divided by 12, rounded to the cent. The payment covers that interest first and the rest reduces the balance. Months are counted until the balance is zero, and total interest is the sum of those monthly charges. If the payment does not cover the interest, the balance never clears and the calculator says so instead of inventing a month count.
None of this applies to new purchases while your grace period is intact. Pay each statement balance in full and those purchases carry no interest at all, whatever the APR says. The rule is on the grace period page and in what is a grace period on a credit card.
The balance and the statement date behind that daily charge belong in the credit card tracker. If the reason you are carrying a balance is rewards, read when cashback loses to interest before you chase the earn rate.
The balance you type is not the figure frozen on the bill generation date, which is the statement closing date. Paying before the statement date is what lowers that reported figure; it does not change the interest math on a balance you already carry. How an APR becomes the daily charge is in APR and interest. To run a full cycle, open the CardLab simulator. Other tools are on the credit card calculators page.
Common questions
How much interest will I pay on a $5,000 credit card balance?
At 24.99% APR, $5,000.00 costs about $3.42 a day, or roughly $102.70 over a 30-day cycle if the balance does not change. Paying $200.00 a month instead clears it in 3 years and costs $2,135.18 in interest on the monthly formula above.
How do you calculate credit card interest monthly?
Divide the APR by 12 to get the monthly periodic rate, then multiply by the balance. At 24.99% APR the monthly rate is 2.0825%, so $5,000.00 costs $104.13 for the month. Your statement may differ slightly because most issuers charge the daily rate on each day's balance, which is the average daily balance method.
How do you calculate credit card interest from the APR?
Turn the APR into a daily periodic rate by dividing by 365 (some issuers use 360), then multiply by the balance for each day and add the days up. 24.99% ÷ 365 = 0.0685% a day, so a steady $5,000.00 balance costs $3.42 a day and $102.70 over a 30-day cycle. Your card agreement names the APR and the day count; the APR and interest guide explains the conversion.
How does this credit card interest calculator work?
Divide the APR by 12. Multiply that monthly rate by the balance and round to the cent. That is one month of interest. Apply the payment to the interest first and the rest to the balance, then repeat until the balance is zero. Payoff months are that count. Total interest is the sum of the monthly interest charges. If the payment does not cover the interest, the balance does not clear. Paying the statement in full keeps the grace period, so new purchases are not charged this interest.
Why was I charged interest when I paid my balance?
Usually residual interest. If you carried a balance last cycle, interest kept accruing between the statement date and the day your payment landed, so a charge appears on the next statement even though you paid in full. Paying in full again clears it and restores the grace period. What each date controls is in statement date vs due date.
Does a 0% APR card really charge no interest?
On the balances the promotion covers, yes, until it expires. Purchases may be excluded if the offer is for balance transfers only, and cash advances are almost never included. Deferred-interest offers are different again: miss the deadline and the whole accrued amount is charged retroactively.