Credit card interest calculator

How is credit card interest calculated?

Most issuers use the average daily balance: the daily periodic rate (APR ÷ 365, or ÷ 360 at some banks) times the average daily balance times the days in the billing cycle.

Example: how much interest on $3,000 at 24% APR?

The daily rate is 24% ÷ 365 = 0.06575%, about $1.97 a day. Over a 30-day cycle that is $59.18.

What is the average daily balance?

The sum of each day’s balance in the billing cycle divided by the number of days. Paying part of the balance early in the cycle lowers it.

How do I avoid interest?

Paying the full statement balance by the due date usually avoids interest on new purchases. Cash advances often start charging interest right away.

How long will it take to pay off?

Use the credit card payoff calculator to see the months and total interest for a monthly payment.

Why is my statement different from this estimate?

The calculator applies one rate to one balance. A real statement uses the balance of every day in the cycle, and the CFPB notes that cards often have separate APRs for purchases, cash advances and other transactions, each with its own balance. The cycle length varies (30 days is only the default here), banks differ on 365 or 360 days ($60.00 instead of $59.18 on the example), and new purchases and fees change the daily balance.

How long do I have to pay after the statement arrives?

Under Regulation Z (12 CFR 1026.5(b)(2)(ii)), a credit card issuer must have procedures to send or deliver the statement at least 21 days before the payment due date, and it may not treat a payment as late if it arrives within 21 days of the statement being sent.

How the interest is figured

The daily periodic rate is the APR divided by 365 (or 360). Each day’s interest is that day’s balance times the daily rate, so a cycle’s interest is the average daily balance times the daily rate times the days. This page uses one balance for the whole cycle and shows one cycle only, without carrying unpaid interest forward.

Worked example: $3,000 at 24% APR

The daily rate is 24% ÷ 365 = 0.06575%, so $3,000 costs $1.97 a day and $59.18 over 30 days. Now suppose you pay $1,500 on day 10 and make no new purchases. The balance is $3,000 for 10 days and $1,500 for 20, an average daily balance of $2,000, and the cycle’s interest falls to $39.45. If each day’s interest were added to the balance and charged interest itself, which depends on your cardholder agreement, a 24% APR would cost about 27.1% over a full year.

Common mistakes

Dividing the APR by 12 and multiplying by the balance gives a monthly figure that differs from the daily method, because months have different numbers of days. Assuming the grace period survives a carried balance is another: the CFPB says it typically covers only new purchases and only if you were not already carrying a balance, so once you carry a balance, new purchases may start accruing interest right away. Not knowing where a payment goes is a third: the CFPB says issuers generally apply the part above the minimum to the highest-rate balance first and decide how to apply the minimum portion.

Sources: CFPB, How does my credit card company calculate the amount of interest I owe? (reviewed January 22, 2024): daily periodic rate, average daily balance, separate APRs, grace period and how payments above the minimum are applied; Regulation Z, 12 CFR 1026.5(b)(2)(ii), on how early a credit card statement must be sent before the due date. Find the payoff time in the credit card payoff calculator, convert a rate to a yield in the APY calculator and see how a balance is repaid in the debt payoff calculator.

Estimates for planning only — not financial or tax advice. Official statements and your plan documents decide. How we check our calculators.