Credit Card Interest Rate Calculator: Paying interest on your credit card balance No ratings yet.

How Much Interest Will I Pay?

We explain how to calculate interest rates on your current credit card to make sure you aren’t paying over the odds. If you’re new to credit cards you can read up on how credit cards work to get to grips with the basics.

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What is the APR?

So your bank tells you that your credit card has a 15% APR. What does that actually mean? How does you calculate your credit card interest rate, and how does that translate into how much you actually pay?
A credit card’s interest rate is the price you pay for borrowing money. For credit cards, the interest rates are typically stated as a yearly rate, called the annual percentage rate (APR). On most cards, you can avoid paying interest on purchases if you pay your balance in full each month. Other than Credit Card Interest Rate Calculator, Calculating your APR on your credit cards takes only a few minutes if you know some key factors and a little algebra.

How do you figure out APR on credit cards?

To do so, divide your APR by 365, the number of days in a year. At the end of each day, the card issuer will multiply your current balance by the daily rate to come up with the daily interest charge. That charge is then added to your balance the next day, a process called compounding. – source

How is the minimum payment calculated?

In many cases, a credit card company will charge a percentage of the balance on the card as the minimum monthly payment. If you have a $1,000 balance and a 2% minimum, you will owe at least $20 for the month. Part of that money will go toward interest, and a tiny portion of it will go towards your principle. – source

Credit card APR tells you what interest rate you pay, but it doesn’t include the effects of compounding – so you almost always pay more than the quoted APR. If you only make small (or minimum) payments on your credit card, you’ll start paying interest not only on the money you borrowed, but you’ll also pay interest on the interest that was previously charged to you. The APR on mortgage loans, however, is different from the simple interest rate because of additional charges or fees to you for securing your loan.

To Avoid Paying Credit Card Interest – Follow these 5 simple steps

1. Pay your balance on time and in full every month, and you’ll never have to pay or calculate credit card interest again!

2. Set a reminder to pay your bill early

3. Only charge what you can afford to pay off each month.

4. Take advantage of a 0% APR balance transfer offer

5. Use your card only in emergencies

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