Capital One interest charges equal 14.24% - 26.99%, depending on the card and the cardholder’s creditworthiness, divided by 365. The resulting rate is approximately what Capital One applies to an unpaid credit card balance every day until it is paid in full. However, the math gets a little bit complicated.
Here’s how it works: Capital One adds up each day’s balance and divides the total by the number of days in the billing period. Capital One also sets a daily periodic rate, which is the Annual Percentage Rate (APR) divided by 365. To calculate the interest, it multiplies the average daily balance and the daily periodic rate, then multiplies the result of that by the number of days in the billing period. If there’s a $0 or negative balance from the previous billing period, however, this does not apply.
Keep in mind that the APR is generally what you’d pay in interest over an entire year. But with compound interest, you’ll end up paying slightly more. That’s because the interest charged one day becomes part of the balance accruing interest the next. However, this only occurs if you start a new billing period with an existing balance.
Of course, you can avoid interest charges altogether if you pay your statement balance within the grace period every month. Capital One gives you 25 days until the due date to pay the entire balance with no interest. Any unpaid balance will incur daily interest charges and will cancel the grace period. You can have the grace period reinstated after you’ve paid the entire balance for two straight billing cycles.