How do I figure out how much interest I will pay on my credit card?

You can figure out how much interest you will pay on your credit card by dividing the card’s APR by 365 and multiplying first by your average daily balance and then by the number of days in the billing period. The interest charges you owe will also be listed on the credit card’s monthly statement.

How to Calculate Credit Card Interest Charges

1. Find your credit card’s APR

   Your credit card’s APR will be listed in your cardmember agreement and on your monthly credit card statements.

2. Divide your APR by 365

   An APR reflects the annual cost of borrowing, but credit card charges are assessed daily. Dividing by the number of days in a year gives you the daily interest rate – or daily periodic rate – for your credit card.

3. Multiply the daily interest rate by your average daily balance

   Your average daily balance is the sum of your balances for each day in the billing period divided by the number of days in the billing period.

4. Multiply the resulting amount by the number of days in the billing period

   When this calculation is done, you will have the interest charges due for the billing period. Just bear in mind that some details do vary by credit card company.

Alternatively, the easiest way to determine how much interest you will pay on a credit card is to use WalletHub’s credit card payoff calculator. It’s a free tool that allows you to input the amount of debt you have (or will have) and your interest rate to get a payoff plan and a cost estimate.

You can set a payoff date, and we’ll tell you what monthly payments you’ll need to make. Or you can set a fixed monthly payment, and we’ll tell you how long it will take to pay off. We’ll also tell you the total amount of interest you can expect to pay and even which credit cards can save you the most money.

Whether you use WalletHub’s calculator or calculate credit card interest charges by hand, you should first understand the basics of how credit card interest works. We’ll highlight some key points below.

Key Things to Know About How Much Interest You’ll Pay on Your Credit Card

• If you pay off your balance in full by your due date, you won’t owe any interest.
• If you carry a balance from month to month, the interest you’ll owe depends on your Annual Percentage Rate (APR). That shows how much interest you’d pay in a year. But since credit card interest gets charged daily, your card’s interest rate is its APR divided by 365.
• Credit card interest compounds daily, which means the interest rate applies to your whole balance at the end of each day, including unpaid interest charges from previous days.
• The average APR among new credit card offers is 22.15%. But credit card APRs vary widely based on the applicant’s credit standing.
• Nearly all credit card APRs are variable, as opposed to fixed, meaning they’re based on a particular benchmark interest rate. This usually is the prime rate, which banks use when lending to each other.
• Many cards offer lower introductory APRs on purchases and balance transfers for a limited time, often starting at 0%. Once the introductory period ends, the APR will change to the normal rate.

There are several online calculators to help you figure that out, including one here on this site, but essentially it all comes down to your interest rate and the balance that it applies on.

If you pay your entire balance before the end of your grace period, you won't have to pay a penny extra.