Christie Matherne, Credit Card Writer
@christie_matherne
You can easily find the interest rate on your credit card by looking at your monthly credit card statements, your online account, or your cardmember agreement. Your interest rate will be there in the form of an annual percentage rate (APR). As “annual” implies, an APR is the cumulative interest rate for a whole year, but you can use it to calculate your actual interest charges from day to day or month to month.
How to Calculate Your Credit Card's Daily Interest Rate
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.
How Your Credit Card Interest Rate Can Change
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.
When Your Interest Rate Won't Matter
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.
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People also ask
How do credit card companies determine their APRs?
Credit card companies determine their APRs based on your credit standing – or how much risk you pose as a borrower – as well as broader factors, like the health of the economy. The credit standing is based on criteria such as an applicant’s credit history, income, and the total debt owed. Other considerations include age, monthly housing payments, and employment status.
So, if a credit card company advertises a card’s APR as a...
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