FinanceCalcs
Credit Card Interest Calculator
Calculate exactly how much interest your credit card charges you — per day, per month, and per year. See the true daily cost of carrying a balance and how different payment amounts change your interest burden.
Enter your balance and APR for an instant breakdown. Add a monthly payment to see how interest accumulates over time.
Credit Card Interest Calculator
APR: 0% | Daily Rate: 0%
Monthly Interest: $0
- Interest Accrued
- Balance
Interest Cost at Common APRs — Your Balance ($0)
| APR | Daily Rate | Interest / Month | Interest / Year | vs. Your Rate |
|---|
"A credit card balance doesn't just sit there — it earns the bank money every single day you carry it."
-- Consumer Finance Principle
How credit card interest is calculated
Credit card interest is calculated using the Average Daily Balance (ADB) method by most major US issuers. Your balance is tracked each day of the billing cycle, summed, and divided by the number of days to get the average. That average is multiplied by the Daily Periodic Rate (APR ÷ 365) and then by the number of days in the cycle.
Formula: Interest = Average Daily Balance × (APR / 365) × Days in Billing Cycle
The Daily Periodic Rate (DPR) is your APR divided by 365. At 22.99% APR, the DPR is about 0.063% per day. On a $4,500 balance that's $2.83 in interest accruing every single day — $85/month and over $1,000/year — just for carrying the balance.
Payments reduce your average daily balance for the remainder of the cycle. A payment made on day 15 of a 30-day cycle reduces the balance for only 15 days — half the potential savings compared to paying on day 1. This is why paying as early as possible in the cycle saves the most interest.
A grace period (typically 21–25 days after the statement closes) allows you to avoid all interest if you pay your full statement balance. This calculator assumes you carry a balance — i.e., the grace period does not apply.
lightbulb Interest by APR — $5,000 Balance
| APR | Monthly Interest | Annual Interest | Daily Cost |
|---|---|---|---|
| 14.99% | $62 | $750 | $2.05 |
| 18.99% | $79 | $950 | $2.60 |
| 22.99% | $96 | $1,150 | $3.15 |
| 26.99% | $112 | $1,350 | $3.70 |
| 29.99% | $125 | $1,500 | $4.11 |
The difference between a 14.99% and 29.99% APR card on a $5,000 balance is $750/year in interest — just for carrying the same balance.
Credit Card Interest FAQs
Why does my interest charge look higher than APR / 12 × balance?
Because interest accrues on every day's balance, including new purchases and any unpaid interest from the previous cycle that was added to your balance. If you made purchases during the month, those are included in your average daily balance from the day they post — not just at month end.
How can I avoid paying any credit card interest?
Pay your full statement balance by the due date every month. This keeps you within the grace period and eliminates all interest charges. Even one month of carrying a balance ends the grace period and interest begins accruing on new purchases immediately. Once you carry a balance, new purchases start accruing interest from their transaction date with no grace period.
What's the difference between APR and EAR?
APR (Annual Percentage Rate) is the stated annual rate without compounding. EAR (Effective Annual Rate) accounts for the compounding effect of daily interest accrual. At 22.99% APR with daily compounding, the EAR is approximately 25.8% — the actual annual cost is higher than the advertised rate suggests.
Does paying mid-cycle save interest?
Yes — for the current cycle, paying earlier reduces your average daily balance for the remaining days. A payment on day 5 of 30 reduces your balance for 25 days; a payment on day 25 reduces it for only 5 days. For the most interest savings, pay as early in the billing cycle as possible, not just before the due date.
Terminology
Annual Percentage Rate (APR)
The yearly interest rate on your card balance, expressed as a percentage. Does not include fees. The APR on credit cards is usually variable — tied to the Prime Rate plus a margin. Current average APR for credit cards with balances is around 21–23%.
Daily Periodic Rate (DPR)
APR divided by 365 (or 360 for some issuers). The rate applied to your balance each day. At 22.99% APR the DPR is 0.06298%/day.
Average Daily Balance (ADB)
The sum of your balance for each day of the billing cycle divided by the number of days. The base figure on which interest is calculated. Payments and purchases both affect ADB on the day they post.
Effective Annual Rate (EAR)
The true annual interest rate accounting for daily compounding. Higher than APR. Formula: EAR = (1 + APR/365)^365 − 1. At 22.99% APR the EAR is approximately 25.83%.
Grace Period
The window (typically 21–25 days after statement close) during which you can pay your full balance and avoid all interest. Most cards only provide a grace period if you paid the previous month's statement balance in full. Carrying any balance from the previous month eliminates the grace period entirely.
Penalty APR
A higher rate (often 29.99%) applied after a missed or late payment. Issuers are required to notify you before applying the penalty rate, and must review every 6 months to determine if the lower rate can be reinstated.
Disclaimer: All calculators on this site are provided for informational and educational purposes only. Results are estimates based on the inputs you provide and mathematical formulas — they do not account for taxes, fees, inflation, risk, or other real-world factors that may affect financial outcomes. Past performance does not guarantee future results. Nothing on this site constitutes financial, investment, legal, or tax advice. Always consult a qualified professional before making financial decisions.
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