How much interest will I pay on my credit card?

To avoid interest on a credit card, either pay the full statement balance by the due date every billing period or maintain a $0 balance by not charging any purchases to your credit card account. There is no revolving balance for a credit card’s interest rate to apply to in either case.… read full answer

More specifically, it’s impossible to owe interest without buying anything, and even a card with no balance reports positive information to the credit bureaus every month. Alternatively, making purchases and paying off the full balance listed on the monthly statement by the due date avoids interest thanks to the so-called “grace period” that most cards have. That basically means people who consistently pay their bill in full get an opportunity to do so before interest applies to their purchases.

But interest is most often a concern when you need to buy something now but won’t have all the money for a while. And in that case, the best way to avoid interest on a credit card is to get a card with a 0% introductory APR. Keep reading below to learn more about that option and the rest of the best ways to avoid credit card interest charges.

How to Avoid Interest on Credit Cards:

1. Don’t make purchases, balance transfers or cash advances. Not using your card guarantees no interest, as long as you pay any annual or monthly fees it may charge. And the issuer will still report positive information to the credit bureaus each month.
2. Schedule monthly payments for your full statement balance. As long as you always pay the full balance listed on your monthly statement by the due date, the issuer won’t charge interest. Set up automatic monthly payments from a bank account for the full balance so you don’t need to remember. Just make sure your bank account balance exceeds the amount you charge.
3. Use a 0% credit card, and get out of debt before the regular APR kicks in. Lots of credit cards offer 0% intro rates on purchases, balance transfers or both for a certain number of months after account opening. Your balance won’t accrue interest during that period if you make the minimum payment each month. After the 0% rate expires, the regular interest rate kicks in.

Final Thoughts

It’s not too hard to avoid interest on a credit card if you know what to do. If you’re in the market for a new card and need to finance a big purchase, getting a 0% card is the best option. If you already have debt, you can move the balance to a 0% balance transfer card and pay it off before the intro period expires. WalletHub’s credit card payoff calculator can help you.

To find the interest rate on your credit card, look at your cardmember agreement and your monthly credit card statements. Your interest rate will be there in the form of an annual percentage rate (APR). But as “annual” implies, an APR is the cumulative interest rate for a whole year, which isn’t all that helpful for calculating actual interest charges from day to day or month to month.… read full answer

You can figure your daily interest rate – or daily periodic rate – by dividing your APR by 365 (days in a year) because credit card interest compounds daily. (It’s worth noting that some card issuers may divide by 360 rather than 365). This calculation will give you the actual daily rate at which you accrue interest on a card. If your APR is 19.99%, your daily periodic rate would be 0.0547%.

The terms APR and interest rate are often used interchangeably. For general purposes, they express the same idea, though you’ll get a much better sense of your actual “interest rate” by using the daily periodic rate.

It’s worth noting that most credit card rates change (indicated in terms by a V next to your APR). So if the so-called prime rate that credit card APRs are tied to goes up, your rate will rise, too. A credit card agreement may note that the account’s APR is the prime rate plus a certain fixed percentage. Or, your rate might rise to a penalty APR (also found in credit card terms) if you miss a payment. Your card issuer must notify you of a rate change 45 days before it takes effect, unless you’re 60 days or more past-due on payment.

Though it’s good practice to keep an eye on your APR, interest rates don’t matter if you pay your credit card bill in full every month. If you aim to pay no interest, you won’t have to worry about crunching these numbers.