How credit card interest is calculated
Most credit cards charge interest every day. The card agreement states a yearly rate, the APR, and the issuer turns it into a daily periodic rate (also called the daily percentage rate or DPR) by dividing it by 365 or by 360. The Consumer Financial Protection Bureau (CFPB) notes that issuers use one or the other, so check your card agreement. Then the issuer multiplies that daily rate by your balance. This calculator does the same steps from the balance and APR you type, and shows the result for one billing cycle.
Because the balance can change during the cycle, many issuers use the average daily balance: add up the balance at the end of each day in the cycle, then divide by the number of days. The interest for the cycle is the average daily balance times the daily periodic rate times the number of days.
A worked example
Say your balance is $3,000, your APR is 24% and the billing cycle has 30 days. The daily periodic rate is 24% ÷ 365 = 0.06575%. A $3,000 balance earns about $1.97 of interest per day ($3,000 × 0.0006575), so the cycle costs about $59.18 in interest.
Now suppose you also buy $600 on day 11 and pay $1,000 on day 21. The balance is $3,000 for 10 days, $3,600 for 10 days and $2,600 for 10 days. The sum of the daily balances is $92,000, so the average daily balance is $3,066.67 and the interest for the cycle is about $60.49. A payment made earlier in the cycle lowers the average daily balance more than the same payment made at the end. Try the optional purchase and payment fields to see this yourself.
360 or 365 days, and daily compounding
Dividing by 360 gives a slightly larger daily rate than dividing by 365, so the same APR costs a little more over a year. The CFPB also says some issuers add each day's interest to the balance, so interest is charged on interest. The calculator shows a second figure for that case, which is usually a little higher than the simple result. Your own statement is the final word, because issuers round at their own steps and may use another balance method.
The grace period
A grace period is the time between the end of a billing cycle and the payment due date. According to the CFPB, if you pay the full statement balance by the due date, you generally are not charged interest on new purchases, but card issuers are not required to offer a grace period, and many that do apply it only to new purchases. If you carry a balance from one month to the next, you usually lose the grace period, and new purchases then accrue interest from the day they post. Cash advances are not new purchases, so they are usually charged interest from the day you take them; check the card agreement for the rate and any fees. The optional purchase field in this calculator assumes there is no grace period.
Ways people lower credit card interest
This is general information, not advice for your situation. Common approaches include paying the full statement balance by the due date, paying earlier in the cycle to lower the average daily balance, paying more than the minimum (under the CARD Act, the part above the minimum generally goes first to the balance with the highest rate), comparing a lower-rate card or a personal loan, and asking the issuer whether a lower rate is available. A balance transfer card can lower the rate for a while but usually charges a transfer fee, so read the terms. To see how long a balance would take to clear at a fixed monthly payment, use the credit card payoff calculator. To compare loan offers with fees, use the APR calculator.
What this calculator leaves out
It does not model late fees, annual fees, penalty APRs, minimum interest charges, cash advance or balance transfer rates, promotional rates or deferred interest. It uses one rate for the whole balance, while real cards can have different rates for purchases, cash advances and transfers. As a reference only, the Federal Reserve's G.19 release of October 7, 2026 reports an average APR of 22.36% on credit card accounts that were charged interest (commercial banks, August 2026, preliminary data). Your own APR is on your statement.
Frequently asked questions
What is the daily periodic rate on a credit card?
It is the APR divided by 365 (or 360, depending on the issuer). For a 22% APR, the daily periodic rate is about 0.0603% when the issuer divides by 365. The issuer applies it to your balance each day.
Can I avoid paying interest on my credit card?
Often, yes, on new purchases. If your card has a grace period and you pay the full statement balance by the due date, you generally pay no interest on those purchases. If you carry a balance, interest is charged on it every day, and new purchases usually lose the grace period too. Check your card agreement, because terms differ.
Why is my interest charge different from this calculator?
The calculator uses the balance, APR and days you enter. Your issuer may use 360 days, a different balance method, daily compounding, exact posting dates and its own rounding, and it may add fees or charge other rates on cash advances or transfers. Use the calculator for a close estimate and your statement for the exact charge.
Official sources
Checked on October 16, 2026: CFPB, How does my credit card company calculate the amount of interest I owe?, CFPB, What is a daily periodic rate?, CFPB, Credit cards key terms (grace period), CFPB, What is a grace period?, Regulation Z section 1026.53 (allocation of payments above the minimum), Regulation Z section 1026.54 (limits on finance charges after a grace period is lost) and Federal Reserve, Consumer Credit (G.19).
This page gives general information and arithmetic, not financial, credit or legal advice. Your real interest depends on your card agreement and how your issuer calculates it.