How much interest will I pay on my credit card?

Short answer: divide your APR by 12 and multiply by your balance. That is roughly what your card charges you each month. At a 24% APR, a $3,000 balance builds about $60 of interest a month. Pay less than that and the balance does not go down at all.

Your APR is on your statement, usually listed as the purchase APR. Grab it before you read on, because it is the number that matters most here.

Example

About how much interest one month costs

Example numbers to show the math: one card, the balance stays the same for the month, interest estimated as APR divided by 12. Amounts are rounded.

Balance	At 20% APR	At 25% APR
$1,000	$17 a month	$21 a month
$3,000	$50 a month	$63 a month
$5,000	$83 a month	$104 a month
$10,000	$167 a month	$208 a month

What it means: if a $5,000 balance sat at 25% APR for a whole year, that is about $1,250 paid to the card company for nothing new.

An estimate only. Your card’s rules, fees and real results will differ.

How the card company actually works it out

Most cards charge interest daily, not monthly. They take your APR and divide it by 365 to get a daily rate. At 24% APR, that is about 0.066% a day. Then they multiply it by your average daily balance and by the number of days in the billing cycle.

So $3,000 at 24% over a 30 day cycle comes to about $59. The quick APR divided by 12 method gives $60. Close enough to plan with.

When you pay no interest at all

On most cards, if you pay the full statement balance by the due date, you are not charged interest on new purchases. That window is called the grace period. Once you carry a balance, you usually lose it until you pay in full again, so new purchases start building interest right away too.

Cash advances and balance transfers often have their own rules. Your card agreement has the details. If you have a 0% offer ending soon, read what happens when a balance transfer ends.

What paying more does to your interest

Every dollar off the balance is a dollar that stops costing you interest next month. Same example, $3,000 at 24% APR, no new charges:

$150 a month: about 2 years and 2 months, about $870 in interest.
$300 a month: about 1 year, about $380 in interest.

Doubling the payment cuts the time in half and the interest by more than half. If you have a bigger balance, see how long it takes to pay off $10,000.

Ways to pay less interest

Pay a fixed amount above the minimum. The minimum is built to cover the interest and little else. Here is why your minimum payment feels like it does nothing.
Ask for a lower rate. A short phone call can lower your APR, especially if you have paid on time. See how to ask for a lower credit card APR.
Pay the highest rate card first if you have more than one. Read avalanche vs snowball for how to choose.
Pay early in the cycle. Since interest is based on your average daily balance, a payment made sooner lowers it for more days.

See your own debt-free date

Put your real cards, rates and payments into the free Haluvra app and see the month you will be debt free, plus what an extra $50 or $100 a month changes.

Get your free debt-free date

Or use the quick debt payoff calculator here

Common questions

How do I calculate the interest on my credit card each month?

For a quick estimate, divide your APR by 12 and multiply by your balance. At 24% APR, that is 2% a month, so a $3,000 balance builds about $60 of interest. Your card company works it out daily, so your statement may be a little different.

How much interest is charged on $5,000 at 25% APR?

About $104 a month, or about $1,250 over a year if the balance stayed at $5,000. Paying it down each month lowers the interest as you go.

Do I pay interest if I pay the full balance?

On most cards, if you pay the full statement balance by the due date, you are not charged interest on new purchases. Cash advances and balance transfers often have their own rules, so check your card agreement.

Why did I pay interest when I paid most of my balance?

If you carry any balance past the due date, interest is usually charged on the average daily balance for the whole billing cycle, not just on the part you left. That is why paying in full, when you can, matters so much.

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Haluvra is not a licensed financial advisor. All content is for informational purposes only.