Credit Card Interest Calculator: Calculation and Examples
Estimate a credit-card billing cycle’s interest using average daily balance, APR, and cycle length.
Understanding the calculation
This calculation uses a daily periodic rate of APR divided by 365 and multiplies it by the average daily balance and number of days. It assumes interest applies throughout the cycle and does not add daily compounding. Different balance types and grace periods can change actual charges.
Credit Card Interest formula
Estimated interest = average daily balance × APR ÷ 100 ÷ 365 × billing-cycle days.
Worked example
A $5,000 average daily balance at 24% APR over 30 days gives approximately $98.63 of interest under this model.
Assumptions and interpretation
The average daily balance is a billing-cycle average, not necessarily the statement balance. Purchases, payments, different APRs, grace periods, and compounding can change the actual interest charge.
Displayed amounts are rounded; intermediate calculations use unrounded values. Compare the result with the terms and payment schedule in your agreement. For background on the calculation, read the CFPB explanation of credit-card interest.
Frequently asked questions
What happens when the interest rate is zero?
The estimated interest charge is zero.
Why might the actual result differ?
Payment timing, daily interest accrual, contract rounding, fees, and changing rates can differ from the monthly estimate. Check the lender or issuer’s agreement for the method used.
What inputs should I enter?
Use amounts and rates from the relevant agreement, with time periods matching the labels. Enter zero for an optional amount that does not apply.