# How to Calculate Interest on Your Credit Card

How to Calculate Interest on Your Credit Card – Make the most of your credit card by learning how to calculate the interest you’ll be charged.

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## How to Calculate Interest on Your Credit Card

Depending on your credit card’s terms and conditions, you may be charged interest on your credit card balance from the date of your last statement. Here’s how to calculate the interest on your credit card.

## What is APR?

Annual Percentage Rate (APR) is the yearly cost of borrowing money, including interest charges, expressed as a percentage. For example, if your APR is 15% and you owe \$1,000 on your credit card, you would owe \$1,150 at the end of the year in interest alone.

APR is not the same as your interest rate. Your APR includes both the interest rate charged on your outstanding balance and any fees charged by your card issuer, such as an annual fee. Credit card companies are required by law to disclose both the APR and the interest rate when they advertise their offers.

## What is the daily periodic rate?

Annual Percentage Rate (APR) is the rate at which interest accrues on your credit card balance. The APR is a yearly rate, but because it’s applied to your balance on a daily basis, we need to calculate the daily periodic rate before we can calculate the interest due.

The daily periodic rate is pretty simple to calculate. To get started, you’ll need two pieces of information from your credit card statement:
1. The APR for purchases
2. The number of days in the billing cycle

With those numbers in hand, you can use this formula to calculate the daily periodic rate:

(APR/100) / 365 x number of days in billing cycle = daily periodic rate
For example, let’s say you have a credit card with an APR of 17.99% and a 29-day billing cycle. Applying the formula above would give you a daily periodic rate of .0493%.

Now that we know the daily periodic rate, we can move on to calculating the interest due on your credit card balance!

## How is interest calculated on my credit card balance?

The amount of interest you pay on your credit card balance is determined by your annual percentage rate (APR) and the average daily balance of your account. Your APR is the yearly interest rate charged by your credit card issuer, and it’s important to remember that this percentage is applied to your average daily balance, not your current balance.

To calculate the interest on your credit card balance, you can use a simple interest calculator or the method below.

First, convert your APR from a yearly rate to a daily rate by dividing it by 365. Then, take your average daily balance and multiply it by the daily rate. This will give you the amount of interest that you’re paying on your current balance each day.

For example, let’s say you have a credit card with an APR of 14% and an average daily balance of \$1,000. To calculate the interest you’re paying each day, you would divide 14% by 365 to get the daily rate of 0.038%. Then, you would multiply \$1,000 by 0.038% to get \$3.80 in interest charges each day.

## How to Avoid Paying Interest on Your Credit Card

If you have a credit card, you probably know that you can end up paying a lot of interest if you don’t pay your balance in full each month. However, you may not know how credit card interest is calculated. In this article, we’ll explain how to calculate interest on your credit card so that you can avoid paying it.

### What is a grace period?

Your credit card company may give you a grace period on purchases. This is the time you have to pay your bill in full before interest is charged. The grace period typically lasts 21 days, but it can be longer or shorter. It depends on your credit card issuer, and sometimes it depends on the type of purchase you made.

If you carry a balance from one month to the next, you won’t receive a grace period that month. And if your account is ever 60 days past due, you likely won’t receive a grace period until you bring your account current.

Check with your credit card issuer to find out when your grace period begins and ends.

### How can I avoid paying interest on my credit card balance?

You can avoid paying interest on your credit card balance by making sure that you pay off your entire balance every month. This means that you will need to make at least the minimum payment by the due date each month, and then pay off the rest of the balance. If you carry a balance from one month to the next, you will be charged interest on that balance.

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