Credit Card Interest Calculator

When you carry a balance on a credit card past the grace period, the issuer charges interest on the amount you owe. Interest is the cost of borrowing, and it compounds — meaning you pay interest on previously accrued interest — which can make balances grow quickly if you only pay the minimum.

APR (annual percentage rate) is the yearly cost of borrowing expressed as a percentage. Credit card APRs are usually stated as a nominal annual rate. To estimate the monthly charge, issuers divide the APR by 12 and apply that periodic rate to your balance, though many also calculate interest daily. This calculator uses a simplified monthly model for projection purposes.

Some issuers calculate interest using a daily periodic rate (APR ÷ 365) applied to your average daily balance. Others apply a monthly rate (APR ÷ 12) to the cycle balance. The timing affects the exact charge. This tool uses the simplified monthly method, which is close but not identical to a real statement calculation.

The average daily balance method sums your balance each day of the billing cycle and divides by the number of days. Purchases made mid-cycle increase the daily balance from that day forward, which is why new spending raises your interest charge even within a single month. Daily interest is then applied to that average.

Minimum payments are usually a small percentage of your balance plus fees and interest. Paying only the minimum can extend payoff over many years and cost several times the original charge in interest. Raising your payment — even modestly — accelerates principal reduction and lowers total interest paid.

New purchases add to your balance before interest is calculated. If your payment does not cover the prior balance plus new purchases plus interest and fees, the balance grows — this is negative amortization. The calculator flags a warning when it detects this pattern.

Some cards offer a promotional (introductory) APR for a limited time — often 0% — on purchases or balance transfers. When the promo period ends, the standard APR applies to the remaining balance. Planning your payoff within the promo window can avoid the higher rate entirely. The calculator lets you model a promotional APR and its duration.

• Pay more than the minimum each month to reduce principal faster.
• Make payments before the statement closing date to lower reported balances.
• Transfer balances to a lower-APR or promotional-rate card, watching for transfer fees.
• Avoid new purchases while paying down a balance to stop the balance from growing.
• Pay on time to avoid penalty APRs and late fees.