Credit Card Interest Calculator

Miscalculating credit card interest costs borrowers an average of $1,200 per year in avoidable charges. Credit card issuers compute interest using the Average Daily Balance method: the annual percentage rate (APR) is divided by 365 to produce a daily periodic rate, which compounds against your outstanding balance every billing cycle. This calculator applies that exact method month-over-month, generating a full amortization schedule so you can see precisely how each payment splits between principal reduction and interest expense. It also models the minimum payment trap: when you pay only the issuer's required minimum (typically 1 - 3% of the balance or a $25 floor, whichever is greater), payoff timelines can stretch beyond 20 years.

The tool assumes no new charges are added to the card and does not account for promotional 0% APR introductory periods. Results approximate real statements; actual amounts vary by issuer rounding rules, billing cycle length (28 - 31 days), and whether the issuer uses a one-cycle or two-cycle average daily balance method. For balances above $10,000 at rates exceeding 20%, even small payment increases produce outsized savings. Use the comparison mode to quantify the difference.

Monthly interest is derived from the Annual Percentage Rate divided across 12 billing periods:

Where I_m = monthly interest charge, B = outstanding balance at the start of the billing cycle, and APR = annual percentage rate expressed as a decimal (e.g., 0.2199 for 21.99%).

The minimum payment required by most issuers follows a floor-bounded percentage model:

Where r = minimum payment rate (typically 0.01 to 0.03) and F = fixed floor amount (commonly $25 or $35). When the remaining balance falls below F, the minimum payment equals the full balance plus accrued interest.

Each month the balance updates as:

Where P = actual payment made. The principal reduction per cycle equals P − I_m. Total interest paid is the cumulative sum of all I_m values across the payoff horizon.