The credit card interest calculator helps you figure out how much of your monthly payment is applied to the principal and how much is the interest. It also informs you how many months you have until the card is paid off and your total interest cost until the payoff.
This interest rate will be printed on your monthly statement and the rates will be given to you as an APR.
Credit Card Interest Calculator Monthly Payment
Credit card interest compounds daily. This implies that the interest charged for day 1 of the period will be included in the calculation for day 2, and the interest from day 2 will be included in the calculation for day 3, and so on. So, your minimum payment every month will encompass all the interest that has accrued, the fees you have incurred and a small percentage of the principal balance.
How to Calculate Credit Card Monthly Interest
To get your credit card’s monthly interest, you will have to divide your card’s APR BY 365 to know the daily periodic rate. After this, you multiply it by the card’s average daily balance so you can get the interest accumulated in one day. Then you multiply by the number of days in the billing period to get your monthly interest.
However, your credit card has a grace period, so if you pay your bill in full by the due date every month, you will owe no interest on your card. Also, your card issuer will calculate your interest on your monthly statement, so you may not need to calculate it. Anyway, follow the steps below to know how to calculate your monthly interest on your credit card.
- You have to divide your APR by 365, which is the number of days in a year to get your card’s daily periodic date.
- Then you add up your card balance on each of the billing periods and divide it by the number of days in the billing period.
- After this, you multiply the periodic date and the average daily balance. The result you get is the amount of interest you get in one day.
- Next, you multiply the daily interest by the number of days in the billing cycle to get the monthly interest.
To get your credit card monthly interest, you will need to know what your credit card balance is every day. Also, know that you only pay interest on balances that you carry from your billing period to your billing period. So, you are advised to always pay in full before your due date.
How To Use the Credit Card Calculator to Calculate Your Monthly Interest
The steps below will aid you in using the calculator to calculate your monthly score.
- Open a credit card calculator.
- Check for your current balance on your credit card statement and fill it in the first space. Note that you are not to add a dollar sign or commas, but you can include a decimal.
- Then you enter your current interest rate charged by your credit card. Your interest rate will be displayed on your statement as APR. There is a possibility that it may have changed since you first signed up for the card. Hence you need to check your recent statement to get your current interest rate. When entering the percentage interest rate, you do not need to add a percentage sign.
- After this, you enter the number of days in your billing cycle. You will find this in your statement.
- Then tap the “calculate” button and you will find the interest amount for the month.
What To Know About Your Credit Card Monthly Interest Payment
Some important information about credit card monthly interest will be given below. Scroll down to get this valuable information that will help your credit score.
- You will not owe any interest if you pay off your balance in full on your due date.
- Some credit card gives lower introductory APRs on purchases and balance transfers for a limited time that starts at 0%. The APR will change to the normal rate when the introductory period ends.
- When you do not pay a balance from month to month, the interest you will incur will be determined by your APR. This will inform you how much interest you will pay in a year. However, since credit card interest is being charged every day, your card interest rate will be your APR divided by 365.
- Most credit cards’ APRs are variable, as opposed to fixed. This implies that they are based on a benchmark interest rate. And this is the prime rate that banks use when they lend to each other.
- Interest on credit cards compounds every day, this implies that the interest rate applies to your whole balance at the end of each day. This also comprises unpaid interest charges from the preceding days.
- The average APR for a new credit card is 22.75%. however, credit card APRs differ depending on the applicant’s credit score.
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