A credit card’s APR looks like an annual rate, but interest is actually charged day by day. Issuers convert the APR to a daily periodic rate, track your balance every day of the billing cycle, and bill interest on the average. This credit card interest calculator follows the same average daily balance method that appears in cardholder agreements. You can work from your starting balance and each purchase and payment, or from the average daily balance printed on your statement.
How to use the credit card interest calculator
- Enter your card’s APR. Use the purchase APR, or the cash-advance APR for advances.
- Choose what you know:
- My balance and activity: enter the balance at the start of the cycle, then list transactions as day of cycle, amount. Use a minus sign for payments and credits, for example
18, -600. - My average daily balance: enter the figure from your statement.
- My balance and activity: enter the balance at the start of the cycle, then list transactions as day of cycle, amount. Use a minus sign for payments and credits, for example
- Enter the days in the billing cycle and whether your issuer divides the APR by 365 or 360.
- Leave compounds daily checked if your issuer adds each day’s interest to the balance, as most do.
How card interest is calculated
With daily compounding, each day’s interest becomes part of the next day’s balance, so the average daily balance includes interest charged earlier in the cycle. The effective annual rate shows what daily compounding does to a balance carried for a full year:
Worked example
Your card has a 24.99% APR and a 30-day cycle. You start with $2,500, then:
| Day | Activity | Balance that day |
|---|---|---|
| 1 | — | $2,500.00 |
| 5 | +$120 purchase | $2,626.85 |
| 12 | +$450 purchase | $3,089.47 |
| 18 | −$600 payment | $2,502.18 |
| 24 | +$75 purchase | $2,587.48 |
- Daily periodic rate: 24.99% ÷ 365 = 0.06847%
- Average daily balance, with daily compounding: $2,673.10
- Interest for the cycle: $2,673.10 × 0.0006847 × 30 = $54.90
Making the same $600 payment on day 5 instead of day 18 would lower the average daily balance, and the interest, by about $5.40 this cycle (to $49.49).
Interest on $2,673 for one cycle at different APRs
| APR | Daily rate | Interest (30 days) |
|---|---|---|
| 15% | 0.0411% | $32.96 |
| 20% | 0.05479% | $43.94 |
| 24.99% | 0.06847% | $54.90 |
| 29.99% | 0.08216% | $65.89 |
Ways to pay less interest
- Pay early and often. Payments lower the average daily balance from the day they post.
- Get back to paying in full. Restoring the grace period stops interest on new purchases.
- Move the balance. A 0% transfer can pause interest. Check whether the fee is worth it with the balance transfer calculator.
- Ask for a lower APR. Issuers sometimes agree, especially for long-time customers in good standing.
Federal rules under the Truth in Lending Act require your statement to show the APR, the periodic rate, the balance interest was charged on and the interest charged. Use them to check this calculator. To see how long your balance will take to clear, use the credit card payoff calculator. If you carry several balances, plan the order with the debt payoff calculator.
Estimates only. Issuers differ in balance computation, rounding, compounding and when transactions post; your cardholder agreement describes the exact method.
Frequently asked questions
How is credit card interest calculated?
Most issuers divide the APR by 365, or sometimes 360, to get a daily periodic rate. They then apply it to your average daily balance for the billing cycle and multiply by the number of days. At 24.99% APR, the daily rate is 0.06847%, so an average daily balance of $2,800 over 30 days costs about $57.51.
What is the average daily balance?
It is the sum of your balance at the end of each day in the billing cycle, divided by the number of days. Purchases raise it from the day they post and payments lower it from the day they post. That is why paying earlier in the cycle saves interest even if the amount is the same.
Does credit card interest compound?
Usually yes. Most issuers add each day's interest to the balance, so tomorrow's interest is charged on today's interest too. Daily compounding turns a 24.99% APR into an effective annual rate of about 28.38% on a balance carried all year.
How can I avoid paying credit card interest?
Pay the full statement balance by the due date every month. Most cards then give you a grace period, so new purchases accrue no interest. Once you carry a balance, you typically lose the grace period until you pay in full again, and cash advances accrue interest from the day you take them.