Credit Card Interest Calculator — Daily Rate, Payoff Time and Total Interest

How to use the credit card interest calculator

1. Enter your Card balance and the Purchase APR from your statement.
2. Choose whether the daily rate is APR ÷ 365 or 360 (your card agreement says which) and set the Billing cycle length in days.
3. Pick the Interest method: Daily compounding, as the CFPB describes, or Average daily balance (simple).
4. Set the Minimum payment rule, the Minimum payment percentage and the Minimum payment floor to match your cardholder agreement.
5. Enter Your monthly payment, the amount you plan to pay each month.
6. Read the interest charged this cycle, then compare payoff time and total interest for minimum payments and for your payment, plus the payment that clears the card in 36 months.

What it does and when to use it

A credit card statement shows an APR, but interest is charged by the day. That makes it hard to see what carrying a balance really costs, or how long it will take to clear. This calculator turns your APR into a daily rate, then plays out the balance one billing cycle at a time.

Use it to:

• Understand this month’s interest charge and check it against your statement.
• See the true cost of paying the minimum, in years and dollars.
• Pick a monthly payment that clears the card in a time frame you can live with.
• Compare a balance transfer or a consolidation loan with what the card costs now.
• Prioritize cards. Run each card and target the one with the highest cost first.

How it works

Daily periodic rate. The CFPB explains that the daily periodic rate is generally the APR divided by 360 or 365, depending on the issuer:

daily rate (d) = APR ÷ 365 (or ÷ 360)

Interest for one billing cycle. With a balance B that does not change during a cycle of D days:

• Daily compounding: interest = B × ((1 + d)^D − 1). Each day’s interest joins the balance, as the CFPB describes.
• Average daily balance, simple: interest = B × d × D.

The two give almost the same answer for one month. Daily compounding is a little higher.

Minimum payment. After interest is added, the statement balance is B + interest. The calculator then works out the minimum:

• Interest + % of balance: minimum = % × statement balance + interest.
• % of balance: minimum = % × statement balance.

Either way it is never below your floor and never more than you owe.

Payoff. The tool repeats the cycle (add interest, take a payment) until the balance reaches zero. It stops after 100 years. If a payment does not cover the interest, the balance never falls, and the tool says so instead of showing a total.

36-month payment. This is the level payment that clears the balance in 36 cycles at the card’s rate per cycle (i): payment = B × i ÷ (1 − (1 + i)^−36). Regulation Z requires US statements to show a 3-year repayment estimate next to the minimum payment warning. Your issuer’s figure may differ slightly because of rounding and its own assumptions.

Worked examples

All figures come from the calculator with a 30-day billing cycle.

1. $5,000 at 24% APR, divided by 365. The daily periodic rate is 0.06575%. With daily compounding, interest for the cycle is $99.58. (If your issuer divides by 360, it is $100.97.) Under an “interest + 1%” rule with a $25 floor, the first minimum payment is $150.57.

• Minimum payments only: paid off in 19 years 3 months, with $8,684.61 of interest. You would repay more than two and a half times what you owe.
• $250 a month: paid off in 2 years 2 months, with $1,440.82 of interest. That saves $7,243.79.
• To clear it in 36 months: pay $195.90 a month. Interest totals $2,052.31.

If the card instead used a flat 3%-of-balance minimum, the first minimum would be $152.99, and minimum payments would take 18 years 7 months with $8,315.45 of interest.

2. $1,000 at 18.25% APR, simple method. The daily rate is 0.05%. Over 30 days that is 0.05% × 30 × $1,000 = $15.00 of interest. Minimum payments (interest + 1%, $25 floor) start at $25.15 and take 5 years 2 months, costing $538.40. Paying $100 a month clears it in 11 months for $91.62.

3. A minimum that never wins. On $3,000 at 20%, a minimum of 1% of the balance with no interest added is $30.50 in the first month. Interest for the cycle is $49.71, so the balance grows every month. The calculator reports Never (the payment does not cover the interest). Paying $111.31 a month would clear it in 36 months, with $1,007.26 of interest.

Ways to pay less interest

• Pay the full statement balance when you can. With a grace period, that usually means no interest on purchases.
• Pay more than the minimum, even a fixed amount a little above it. The minimum shrinks as your balance shrinks. A fixed payment does not, so more of it goes to principal each month.
• Pay earlier in the cycle. Because interest is charged on each day’s balance, a payment made before the due date lowers the balance for more days.
• Stop adding to the balance while you pay it down.
• Ask about a lower rate, or compare a balance transfer offer, including its fee and how long the promotional rate lasts.

Limits and tips

• One APR, no new spending. Cash advance rates, promotional rates, penalty APRs, fees and new purchases are not modelled.
• Payments at the end of each cycle. Paying earlier would lower the interest a little.
• Every cycle has the same length. Real billing cycles vary by a few days. The difference is small over a year.
• Your issuer’s formula wins. Use the exact minimum payment rule in your agreement for the closest match.

Related calculators

• Compare minimum payments with a fixed payment in any currency using the credit card payoff calculator.
• Plan a payoff for a loan or several debts with the debt payoff calculator, or see a full monthly table for a consolidation loan in the amortization schedule.
• Once the card is clear, put the same monthly payment to work with the compound interest calculator.