Credit Card Interest Calculator

This calculator uses the straightforward version: the APR divided by 12 gives a monthly rate, applied to the balance. At the tool's default assumptions — a $5,000 balance at a 22% APR — that is roughly 5,000 × 0.22 ÷ 12 ≈ $92 of interest in the first month alone. Most issuers do something slightly more granular. They convert the APR into a daily periodic rate (the APR divided by the number of days in the year) and apply it to an average daily balance over the billing cycle, then add the result at the end of the cycle. Because interest is computed daily and added monthly, the effective annual cost lands a little above the stated APR. The practical consequences of daily accrual are worth knowing. The date a charge posts matters, and so does the date a payment posts — paying earlier in the cycle lowers the average daily balance and therefore the interest. Exact methods vary by issuer and are set out in the card agreement, so treat this page as a close projection rather than a reproduction of your statement. One threshold matters more than any other: whether your payment exceeds the interest accruing. Above it, the balance falls. Below it, the balance grows no matter how faithfully you pay.

A credit card is unusual among loans in that it is possible to borrow at no interest cost at all — but only under a specific condition. Most cards offer a grace period on purchases: if the statement balance is paid in full by the due date, no interest is charged on those purchases. The card functions as short-term borrowing for free. This is not a promotional offer; it is how the standard purchase grace period works on cards that provide one. The condition is strict, and this is where people are surprised. Carry any balance into the next cycle and the grace period typically lapses, meaning new purchases can begin accruing interest immediately rather than after the due date — and restoring the grace period usually requires paying in full again, sometimes for more than one cycle. Paying *most* of the statement balance does not preserve it. Separately, cash advances usually have no grace period at all and often carry both a higher APR and an upfront fee, with interest accruing from the transaction date. Balance transfers have their own rules. Which cards offer a grace period, and on what terms, is in the account agreement.

The minimum is typically calculated as a small percentage of the balance, subject to a floor, and often with accrued interest and fees added. That structure has an unfortunate property: as the balance falls, the minimum falls with it. So paying the minimum is paying a shrinking amount against a debt whose interest charge is also shrinking, and the two decline in step. The result is a payoff period measured in years, sometimes decades, on a balance that a fixed payment would clear in a fraction of the time — and total interest that can approach or exceed the original balance. The fix is structural rather than heroic: pay a fixed dollar amount each month rather than whatever the statement asks for. Because the minimum keeps falling, holding your payment constant means an ever-larger share attacks principal, and the payoff accelerates on its own. Credit card statements are required to carry a disclosure box showing how long it would take to clear the balance making only minimum payments, along with the payment needed to clear it in three years. It is on your statement, it is computed from your actual account, and comparing it against the figure on this page is a useful reality check.

A single card often carries multiple balances at different APRs — purchases at one rate, a cash advance at a higher one, a transferred balance at a promotional rate. Which balance your payment reduces determines how fast the expensive debt actually shrinks. Under US credit card rules, the amount you pay above the minimum must generally be applied to the balance carrying the highest APR first. The minimum payment itself may be allocated at the issuer's discretion. That asymmetry is the thing to act on. Paying only the minimum can leave the high-rate portion largely untouched while a promotional-rate balance is paid down. Paying meaningfully above the minimum directs the excess where it does the most good, automatically. It also explains a common frustration with promotional balance transfers: while a 0% transferred balance sits on the card, new purchases at the standard rate may accrue interest with no grace period, and the payment routing rules determine which one your money reaches. Read the offer terms before treating a transfer as a clean slate.

Several structures exist for moving high-rate debt somewhere cheaper, each with conditions worth reading rather than skimming. A balance transfer at a promotional rate can stop the interest for a defined window, but transfers usually carry a fee expressed as a percentage of the amount moved, the promotional rate expires on a fixed date, and what happens to any remaining balance afterward is set by the agreement. A personal loan at a lower fixed rate converts revolving debt into an amortizing schedule with a definite end date, though approval and rate depend on credit. Issuers also sometimes have hardship programs that reduce a rate or restructure payments; asking costs nothing. Be cautious with any offer that promises to settle or erase debt for an upfront fee. Legitimate options exist, including nonprofit credit counseling, and the CFPB publishes guidance on telling them apart. As for the number on this page: it assumes no new charges, a fixed payment every month, a constant APR, and no fees. Real cards break all four. Most card APRs are variable and move with an index, a single late payment can trigger fees and in some cases a penalty rate, and any new purchase resets the arithmetic. Treat the projection as the best case for the inputs given, not a schedule.