How do I calculate credit card interest?

Consumers Ask How Do I Calculate Credit Card Interest RatesWhile most credit card related websites have some type of calculator that will determine how much a cardholder will pay for interest some people like to know how to calculate this themselves. They can calculate the interest by multiplying their average daily balance by their daily interest and then multiply by the number of days for that month’s credit card statement.

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Calculating the interest on your own can be difficult especially if you do not have all of the information at hand. If you do not want to go through the hassle of trying to calculate your credit card interest on your own there are many websites, like the credit card finder sites, with tools that can do it for you. Suze Orman’s website is a great example of this type of website.

How can I calculate my credit card interest myself?

According to, there is a very basic formula you can use to calculate your credit card interest rate yourself. First you have to find out what your credit card interest rate is. Even though you should already know this you can usually find it either at the top or very bottom of your credit card statement. Your credit card interest rate is listed as a percentage.

After locating your credit card interest rate, you need to figure out what kind of interest calculating system your credit card provider uses. The majority of credit card providers calculate the interest daily.

Next you need to calculate the daily balance for that month. All you have to do is add the total balance for each day and divide that by how many days are in the month for that statement. The final total is the average daily balance. Next divide you annual percentage rate by the number of days in the year, 365. This total is your daily interest rate.

Now multiply your average daily balance by the daily interest rate. Then multiply this number by how many days are in the statement month. The result is the amount of interest you will be charged for that month.

If you have your credit card statement with you the average daily balance should be listed on it as the balances subject to finance charge and the daily interest rate should be listed as the periodic rate.

How does credit card interest affect me?

Credit card interest can be very damaging to a cardholder’s budget. Often when a cardholder receives their shiny new credit card they view it as free money instead of the borrowed money that it actually is. It is not uncommon for a cardholder to go on a mini shopping spree or make purchases that they normally would not when their credit card has a zero balance.

The buyer’s remorse does not usually set in until the credit card bill shows up in the mailbox. Most people do not have the cash handy to pay off their credit card balance each month, especially if their spending got a little out of control. This is when interest can take its toll.

Depending on the interest rate of the cardholder’s credit card the extra debt added to their balance from interest can quickly get out of control. The cardholder can end up paying well over double for an item because of the interest than if they just paid cash for the item to begin with.

How can I keep from having to pay a lot in credit card interest?

The only way to not have to pay any interest on your credit card is to pay your balance in full each month. If this is not a viable option the best thing to do is pay more than the minimum amount due each month. While you will be charged interest on the remaining balance you will pay it off faster and save a lot of money on interest in the long run.

What should I do if I have a lot of credit card debt because of high interest rates?

A very popular way to deal with credit card debt on a high interest credit card is to just get a new credit card. Many credit cards offer no interest rate for the first six months to one year of the account. All you have to do is transfer the outstanding balance of the high interest credit card to the new credit card.

It is important to pay off the balance before the introductory offer expires because the interest rate on the new credit card might be higher than on the original credit card and then you will be worse off than you were before. It is also important to make payments on time with the new credit card. More often than not one late payment will end the introductory interest rate.

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