How To Calculate Credit Card Interest
I am going to explain what you need to do followed by my own example. Lets get started. First thing you need to do is figure out your daily interest rate. Take whatever your APR is and divide it by 365. My APR for this example is 9.99%. My balance at the 9.99% is $550.00.
EXAMPLE- 9.99/365 = 0.02737
Now that you have your daily interest rate take that number and multiply it by the balance given for that rate.
EXAMPLE- 0.02737 X 550.00 = 15.0535
Now take the total of the 15.0535 and multiply it by the number of days that are in the cycle. The number of days in a cycle should be found on the credit card statement somewhere. The days in the cycle will usually change. It will almost never be exactly 30. It can typically range from 28 to 33 days. If you are estimating interest 30 days is a good number to go with. I am going to use 30 since I am just using an example.
EXAMPLE- 15.0535 X 30 = 451.605
This last step is important, you want to move your decimal over twice. So take the 451.605 and move your decimal over.
EXAMPLE- 451.605 = 4.51605
Now you have your answer. Take that amount and get rid of the thousandths position. This will give you a dollar amount. Remember to round your number out and you will see that my example ends up being $4.52.
EXAMPLE- 4.51605 = 4.52
So with the example I gave if you have a balance of $550.00 at an APR of 9.99% over a span of 30 days you will be paying $4.52 in interest. If you have different balances at different rates because of cash advances or balance transfers just do each bucket separately and add the totals. I hope this helped, the math is really easy once you know the formula.
Cash advances and Balance Transfers accrue interest daily. Even if you pay these off in full you will still get charged interest. The interest is calculated the same, but you have no grace period to pay these off like you would a regular purchase.
Beware cash advances. Usually the APR involved with these are much higher than purchase rate. Cash is much more riskier for the bank than purchases so they charge you higher interest. Always check with you financial institution about your cash rate before pulling any advances. With my interest calculation you can determine about how much you will be paying in interest with your next advance, balance transfer or purchase.
EXAMPLE- 9.99/365 = 0.02737
Now that you have your daily interest rate take that number and multiply it by the balance given for that rate.
EXAMPLE- 0.02737 X 550.00 = 15.0535
Now take the total of the 15.0535 and multiply it by the number of days that are in the cycle. The number of days in a cycle should be found on the credit card statement somewhere. The days in the cycle will usually change. It will almost never be exactly 30. It can typically range from 28 to 33 days. If you are estimating interest 30 days is a good number to go with. I am going to use 30 since I am just using an example.
EXAMPLE- 15.0535 X 30 = 451.605
This last step is important, you want to move your decimal over twice. So take the 451.605 and move your decimal over.
EXAMPLE- 451.605 = 4.51605
Now you have your answer. Take that amount and get rid of the thousandths position. This will give you a dollar amount. Remember to round your number out and you will see that my example ends up being $4.52.
EXAMPLE- 4.51605 = 4.52
So with the example I gave if you have a balance of $550.00 at an APR of 9.99% over a span of 30 days you will be paying $4.52 in interest. If you have different balances at different rates because of cash advances or balance transfers just do each bucket separately and add the totals. I hope this helped, the math is really easy once you know the formula.
Cash advances and Balance Transfers accrue interest daily. Even if you pay these off in full you will still get charged interest. The interest is calculated the same, but you have no grace period to pay these off like you would a regular purchase.
Beware cash advances. Usually the APR involved with these are much higher than purchase rate. Cash is much more riskier for the bank than purchases so they charge you higher interest. Always check with you financial institution about your cash rate before pulling any advances. With my interest calculation you can determine about how much you will be paying in interest with your next advance, balance transfer or purchase.
