Credit Card Interest Calculator

How This Credit Card Interest Calculator Works

This tool estimates how much interest you will pay on a revolving credit card balance over a single billing cycle. You enter three pieces of information: your average daily balance, your card’s annual percentage rate (APR), and the number of days in your billing cycle. The calculator then applies a simplified version of the average daily balance method to estimate your finance charges for that period.

The goal is to help you see how expensive it can be to carry a balance from month to month, and how changes in APR, balance, or billing cycle length affect what you pay. Use the results to compare different cards, test payoff strategies, or understand why your statement interest might look higher or lower than expected.

Inputs You Need

• Average Daily Balance (in dollars) — An estimate of your typical unpaid balance across the billing period. If your balance does not change much, you can simply enter your current statement balance.
• APR (%) — Your card’s purchase APR expressed as a yearly percentage. For example, if your APR is 19.99%, enter 19.99.
• Days in Billing Cycle — The number of days your statement covers, typically 28–31 days. You can find this on your credit card statement.

After you enter these values and run the calculation, the tool displays the estimated interest charge for that cycle. If there is a visual chart on the page, it will show how the total interest grows over the days in the billing period.

Average Daily Balance Formula

Most major credit card issuers use some version of the average daily balance method to compute interest. The calculator mirrors that approach with a simplified formula. When your balance stays constant during the billing cycle, the estimated interest I for a cycle of n days with APR r and average daily balance B is:

In words, the calculator:

1. Converts your APR from a yearly percentage to a daily decimal rate by dividing by 365 × 100.
2. Multiplies the daily rate by your average daily balance.
3. Multiplies that result by the number of days in your billing cycle.

That gives an approximate finance charge for one billing cycle using a constant balance. If your balance changes during the month, the true average daily balance method effectively repeats this calculation for each day at that day’s balance and then sums the charges. This calculator approximates that behavior through your single average daily balance input and, if present, a visual line that shows interest adding up day by day.

Interpreting the Results

When you run the calculation, the main number you see is your estimated interest for one billing cycle. Here is how to read and use that value:

• Monthly cost of carrying a balance — The result is a rough answer to “How much will it cost me in interest if I do not pay this balance off this month?”
• Sensitivity to APR — Try changing the APR up or down by a few percentage points. You will see that even small APR changes can lead to noticeably higher or lower interest charges.
• Impact of billing cycle length — Shorter cycles mean fewer days for interest to accrue. Comparing 25 days versus 31 days helps show why statement timing can slightly change your cost.
• Effect of paying down the balance — Lowering your average daily balance, whether by a lump-sum payment or by reducing card usage, directly lowers the interest estimate.

If a chart or graph is available, the horizontal axis represents days in the billing cycle, and the vertical axis shows cumulative interest in dollars. A straight, steadily rising line indicates a constant daily charge. A steeper line reflects a higher APR or larger balance, while a flatter line reflects a lower APR or smaller balance.

Worked Example: Estimating Monthly Interest

Consider a cardholder who carries a $3,000 balance at a 24% APR for a 30-day billing cycle. The question is: how much interest will accrue over that cycle if the balance stays roughly the same?

Using the formula above:

• Balance (B): $3,000
• APR (r): 24%
• Days (n): 30

Step 1: Convert the APR to a daily decimal rate:

daily rate = 24 ÷ (365 × 100) ≈ 0.0006575

Step 2: Multiply by the balance to find the interest per day:

daily interest = 3,000 × 0.0006575 ≈ 1.97

Step 3: Multiply by the number of days in the billing cycle:

cycle interest = 1.97 × 30 ≈ 59.10

The calculator will display an estimated interest charge of about $59 for that month. If there is a visual line chart, it will start near $0 on day one and end just above $59 on day 30, rising by roughly $1.97 each day.

Now imagine you pay $1,000 halfway through the month. Your balance would be around $3,000 for the first 15 days and $2,000 for the remaining 15 days. A more detailed estimate would:

• Compute 15 days of interest on $3,000.
• Compute 15 days of interest on $2,000.
• Add the two amounts together.

Even without running the full daily calculation, you can get a quick sense of the savings by lowering the average daily balance in the calculator from $3,000 to something closer to $2,500 and comparing the results. You should see that making a large payment earlier in the cycle significantly reduces your total interest.

Scenario Comparison Table

The table below compares estimated monthly interest charges on a $2,500 balance under different APRs and billing cycle lengths. All numbers are approximate and based on the simplified formula used by this calculator.

You can plug these same values into the calculator to see how the results change:

• Higher APRs always increase the estimated interest for the same balance and cycle length.
• Shorter cycles reduce the amount of time interest accrues, slightly lowering the total charge.
• Even modest APR reductions (for example, from 20% to 15%) can save you meaningful amounts over time.

How to Use This Calculator to Reduce Interest

While the calculator itself does not change your credit card terms, it can highlight which actions have the biggest impact on your costs. Here are a few practical ways to use the results:

• Test higher payment amounts — Enter lower balances that reflect paying more than the minimum each month. Compare the interest estimates to see how quickly extra payments reduce cost.
• Experiment with earlier payments — If you usually pay near the due date, consider how paying earlier could lower your average daily balance. The lower estimate gives you a sense of the potential savings.
• Compare APR offers — Run side-by-side scenarios with your current APR and a lower promotional or balance transfer APR to see whether switching cards could reduce your monthly interest.
• Plan a payoff timeline — By trying different balance levels and imagining how quickly you can pay down your debt, you can better understand how long it might take to substantially reduce interest charges.

Assumptions and Limitations

This calculator is designed for clarity and education, not for producing exact statement-level figures. It relies on several simplifying assumptions:

• Average daily balance approximation — The tool uses a single average daily balance input rather than tracking each day’s exact transactions.
• Constant APR — It assumes one purchase APR for the entire billing cycle and does not model penalty APRs, teaser rates expiring mid-cycle, or different APRs for cash advances or balance transfers.
• Simple interest over the cycle — The formula treats interest as accruing linearly over the billing period. Real issuers may compound interest differently or use slightly different daily rate conventions (for example, 360 vs. 365 days).
• No fees included — Late fees, annual fees, balance transfer fees, and other charges are not included in the estimate.
• Rounding differences — Credit card companies typically round at the transaction and statement level. Small rounding differences can cause your actual interest to differ from the estimate.

Because of these assumptions, the output should be treated as a useful estimate, not as an exact prediction of what will appear on your credit card statement.

This content is for informational and educational purposes only and does not constitute financial, legal, or tax advice. For details about how your issuer calculates interest, review your cardholder agreement or contact your card issuer directly.