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Project monthly interest charges on your balance given your APR and payment amount. See how new purchases change what you'll owe at the end of the month.
US credit card issuers calculate interest using the Average Daily Balance method. Your APR is divided by 365 to get a daily periodic rate, which is applied to your average daily balance each day of the billing cycle (typically 28–31 days). This means interest compounds daily, not monthly — a 21% APR does not mean 1.75% per month; it means 0.0575% per day, applied to each day's balance. New purchases added during the billing cycle increase your average daily balance and therefore your interest charge. A $500 purchase made on day 1 of a 30-day cycle costs roughly $2.88 in interest at 21% APR — added to the existing interest on your starting balance. If your monthly payment does not exceed the combined interest, your balance grows even when you pay every month.
Most US issuers use the Average Daily Balance method: your APR is divided by 365 to get a daily rate, then multiplied by your average balance over the billing cycle and the number of days in the cycle. Interest compounds daily.
No. The grace period — typically 21–25 days after the statement closes — means no interest is charged if you pay the full statement balance by the due date. Interest only accrues if you carry a balance from month to month.
For credit cards, APR and interest rate are effectively the same — credit cards generally have no origination fees folded into the APR calculation, unlike mortgages. The APR is the annualized cost of carrying a balance.
If your minimum payment (often 1–2% of balance or $25, whichever is higher) is less than your monthly interest charge, your balance increases despite making payments. This is called negative amortization and is common at high APRs on large balances.
Yes. Because interest is based on the average daily balance, paying down your balance mid-cycle lowers that average. A payment 15 days into a 30-day cycle reduces your interest by approximately half the payment amount's interest.
Have more questions? These calculators provide estimates for educational purposes only. For personalized financial advice, consult with a qualified financial professional. See our disclaimer for more information.
$3,000 balance at 22% APR, $200 in new purchases, $100 payment this month
{
"balance": 3000,
"apr": 22,
"new_purchases": 200,
"monthly_payment": 100
}