💰Credit Card Interest Calculator
Calculate your daily credit card interest charges and see how compound interest affects your debt. Understand exactly how much interest you're paying.
Frequently Asked Questions
How is credit card interest calculated?
Credit card interest uses the Average Daily Balance method: (1) Calculate your balance each day of the billing cycle. (2) Add up all daily balances and divide by days in cycle (typically 30) to get average daily balance. (3) Multiply by daily periodic rate (APR / 365). (4) Multiply by days in cycle. Example: $5,000 balance, 19.99% APR: Daily rate = 0.0548%. Average daily balance = $5,000. Interest = $5,000 × 0.000548 × 30 = $82.20. This interest is added to your balance, and next month you pay interest on interest (compound interest). That's why credit card debt grows so fast if you only pay minimums.
What is the difference between APR and daily periodic rate?
APR (Annual Percentage Rate) is the yearly interest rate stated on your card (e.g., 19.99%). Daily Periodic Rate (DPR) is the daily interest rate: DPR = APR / 365. For 19.99% APR: DPR = 0.0548%. You're charged DPR every single day on your average daily balance. Example: $5,000 balance = $2.74/day in interest ($5,000 × 0.000548). Over 30 days, that's $82.20. Over a year with compounding, it's actually higher than stated APR - this is APY (Annual Percentage Yield). Your card compounds daily, so 19.99% APR becomes 22.13% APY. Always look at both rates when comparing cards.
What is compound interest on credit cards?
Compound interest means you pay interest on your interest. Month 1: $5,000 balance, $82 interest → new balance $5,082. Month 2: Interest calculated on $5,082, not $5,000 → $83.50 interest. The interest from Month 1 now generates its own interest. This compounds daily on most cards. Over time, compound interest causes exponential debt growth. Example: $5,000 at 19.99% APR with no payments becomes $6,100 after 1 year (not $5,999 as simple interest would be). The extra $101 is compound interest. Albert Einstein allegedly called compound interest 'the most powerful force in the universe.' It works against you with debt and for you with savings.
Why is my interest charge different each month?
Interest charges vary based on: (1) Average daily balance - differs each month based on purchases, payments, and timing. (2) Days in billing cycle - some months have 28, 30, or 31 days. (3) Payment timing - earlier payments reduce average daily balance more. (4) New purchases - immediately added to balance and start accruing interest (no grace period if carrying a balance). (5) Variable APR - many cards adjust rates monthly based on prime rate. Example: Pay $500 on day 5 vs day 25 of cycle = different average daily balance = different interest. Track your statement cycle dates and pay early in the cycle to minimize interest.
How can I avoid paying credit card interest?
Seven ways to avoid interest: (1) Pay in full every month - grace period (21-25 days) means no interest if you pay statement balance by due date. (2) Use 0% APR balance transfer cards - transfer high-interest debt and pay it off during 0% period (12-21 months). (3) Set up autopay for full statement balance - never miss a payment or carry a balance. (4) Pay off debt with personal loan - 6-12% APR vs 20-30% credit card APR. (5) Stop using cards until debt-free - freeze them or cut them up. (6) Negotiate lower APR - call issuer and ask (50% success rate). (7) Use debit/cash only - can't pay interest if you don't have balances. Even one missed payment costs $50-100+ in interest.
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Financial Disclaimer
This calculator is provided for educational and informational purposes only. The results are estimates based on the information you provide and should not be considered as financial, legal, or tax advice.
Actual results may vary based on your specific circumstances, market conditions, and other factors. Always consult with qualified financial, legal, and tax professionals before making any financial decisions.
We make no guarantees about the accuracy, completeness, or reliability of the calculations. Use this tool at your own risk.