Credit Card Interest Rate Calculator

A credit card is a one-month loan from the card issuer with a credit limit (the maximum amount you can borrow). If you pay it off each month, you are not charged interest. However, if you carry a balance, you are charged interest. If you miss a payment date or skip a payment, you will incur hefty penalties.

You may be able to find low introductory APR cards or a balance transfer credit card that lowers your credit card interest rates temporarily. 

Keep in mind that when the promotional period ends, your interest charges and rate will increase especially on a balance transfer credit card.

The important number here is your APR. Despite the word ‘annual,' this rate is calculated daily and applied to any balances remaining on the card at the end of each month. The terms APR and interest rate are used interchangeably by credit card issuers.

Many cards have variable APRs. They may charge different rates on purchases, cash advances, and balance transfers, and may raise them if you pay late or miss a payment. A few cards have fixed APRs but can change them as stated in the fine print.

Interest is charged at the end of your billing cycle, usually every 21 days. If you can pay your bill before the end of the billing cycle, you will not pay interest. 

Learn more about how credit card interest works.

Your APR depends on how responsible you've been with money as reflected by your credit score. The difference between rates for good and bad credit is vast. 

With an excellent credit score, you'll probably be paying 10-15% less interest on your credit card balances than someone with bad credit. Here's a chart showing the various interest rates you can expect to receive based on your credit health.

To calculate interest payments, you can use a simple formula that will give you the interest for current expenses. This is not completely accurate because credit card charge compound interest. You are paying interest on the interest as well as the old purchases. The compound interest formula is pretty complex, so using our online calculator is much faster and easier!

An applicant's overall creditworthiness determines their APR. If your credit score is in the 700s, you'll get some of the best rates. At the time of writing, the best rates for low-interest cards hover around 19.4%, which is still higher than the interest charges and rates on most personal loans.

If you have bad credit, get ready for a gut punch – your APR could be as high as 36%! With rates this high, it's very important to pay off your balance each month to prevent interest charges from snowballing. Remember, if you don't carry unpaid debts month-to-month, you don't need to worry about your APR and monthly interest payments.

An annual fee to use the card is included in charges and late fees. If you can, look for a card without an annual fee. Always pay your card on time to avoid late fees.

Look at your monthly statement to understand any variable APRs charged by most credit card companies.

Basically, your interest payment is calculated by 1) converting your APR to the daily rate. Divide your APR by 365 or 360. Next, determine your average daily balance by writing all of daily balances down. Add them all up, divide by 21 (the usual number of days in the billing cycle). Multiply this number by the daily rate and then by the number of days in the billing period.

By using your current balance, you can estimate an expected monthly payment to eliminate your debt in a timely manner.