Credit Card Interest Rate Calculator
Calculate Your Credit Card Interest
Credit cards are terrific assets when used carefully. But unfortunately, Americans struggle to keep themselves out of a revolving pit of credit card debt. Credit card debt statistics might not be as scary as student debt, but they’re still alarming, especially when considering how quickly balances can build up. The average American household carrying credit card debt owes nearly $16,000 on their cards, with the average cardholder owing over $5,000. Credit card interest rates can be criminally high too, so a large portion of these balances are accrued interest. What steps can you take to avoid high interest debt? Using our credit card interest rate calculator is a good start!
Fill in the blanks to determine how much interest you’ll pay on your credit card balances.
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When Do I Pay Interest On My Credit Cards?
A credit card is basically a one-month loan from the card issuer. You’ll have a credit limit set (say $3,000) and can spend up to that amount with no penalty. But the bill must be paid in full on the monthly due date or you’ll incur an interest charge on all purchases you made with that credit card. The important number here is your annual percentage rate or 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 the credit card companies.
What’s A Good Annual Percentage Rate?
Your APR depends on how responsible you’ve been with money, and the difference between rates for good and bad credit is vast. With an excellent credit score, you’ll be paying 10-15% less in 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.
How Do I Calculate my Credit Card Interest
For example, let’s assume a credit card with a $3,000 balance carries an APR of 20%. To determine how much interest will build up daily, take the $3,000 balance, multiply by 0.2, and then divide by 365. You’ll get a total of 1.64, meaning you’ll pay $1.64 per day in interest for carrying that $3,000 balance. Math like this isn’t very fun for most people, that’s why we’ve created this helpful credit card interest rate calculator.
What Will I Pay In Interest?
An applicant’s overall creditworthiness determines their APR. If your credit score is in the 700s, you’ll get some of the best rates offered. Currently, the best rates for low interest cards hover around 14-15%, which is still higher than the interest rate on most personal loans. And if you have bad credit, get ready for a gut punch – your APR could be as high as 24%! 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.
Can My Interest Rate Be Improved?
Yes, it can! Banks and credit card issuers are happy to reward their most loyal and responsible customers. If you have a history of on-time payments and a solid credit score, ask your card issuer to lower your APR. These companies don’t have the greatest reputations, but the main reason why most cardholders don’t get their interest rates lowered is that they don’t ask! So don’t be afraid to haggle, call up your credit card company and see what you can get, especially if your credit score has gone up since you were first issued the card. Find out more about our credit counseling and debt management plans.
How Do I Use This Credit Card Interest Rate Calculator?
Type in the balances owed, your annual percentage rate (APR), and the minimum payment amount you need each month (usually a small percentage of the balance). You can enter a different payment amount if you’re trying to pay down debt quickly and determine how long it will take. Getting down to the hard numbers is the best way to pay off debts, so be proactive and take control of the situation. No one likes paying money to spend money!