What this balance costs you in interest

A worked example

Take a $5,000 balance at 22% APR, paid at $200 a month with no new charges.

That APR works out to a daily rate of 0.0603%, or about 1.83% a month. The first month charges $92 in interest, so only $108 of your first $200 reduces the balance.

At $200 a month, interest adds 35 cents to every dollar of the original balance.

Raising the payment to $300 brings the interest down to $1,022. That is $728 you keep.

These figures come from the same math as the calculator above, so the two always agree.

How this calculator works

You enter the balance, the APR, your monthly payment, and any extra you plan to add.

Each month it charges interest at the APR divided by 12, applies your payment, and records how much went to interest and how much to the balance. The schedule under the result is that record, one row per month.

The first row is the one to read. It shows how much of your payment the card keeps as interest before any debt goes away.

It assumes no new purchases, no fees, and a rate that stays put. Most issuers charge interest on your average daily balance, so real statements run a few dollars different.

How card interest is charged

Your APR is a yearly rate. Most issuers divide it by 365 to get a daily rate, then apply that rate to your balance each day of the billing cycle.

Pay the full statement balance by the due date and most cards charge no interest on new purchases. That window is called the grace period. Carry a balance past the due date and the grace period usually ends, so new purchases start collecting interest right away.

Federal rules require the issuer to mail or deliver your statement at least 21 days before the payment is due.

Questions people ask about credit card interest

Why is my interest different from this calculator?

Three usual reasons. Your issuer charges on the average daily balance, so the timing of payments and purchases moves the number. Billing cycles are not all the same length. New purchases add to a balance the calculator treats as fixed.

How do I stop paying interest on a credit card?

Pay the statement balance in full by the due date. Some cards take a billing cycle or two of full payments to restore the grace period. If paying in full is out of reach, a 0% balance transfer pauses the interest for a set period, usually for a fee of 3% to 5% of the amount moved.

Does paying twice a month lower my interest?

A little. Most issuers charge interest on your average daily balance, so money paid earlier in the cycle lowers that average. The effect is small next to paying more in total, but it is real.

Is APR the same as the interest rate on a card?

On a credit card, yes. The APR is the yearly interest rate, with no fees built in. Mortgages and other loans are different. Their APR includes some fees, so it runs higher than the note rate.

What happens if I only pay the minimum?

The payment shrinks as the balance shrinks, and the payoff stretches across years. See the full cost with theminimum payment calculator.