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How to calculate credit card interest





Read more about low-interest credit cards here:

When you know how credit card interest is calculated, you can better understand the cost of carrying debt. A little bit of math reveals how much you’re spending on interest charges.

NerdWallet’s how-to video walks you through each step:

1. Find your credit card’s APR on your billing statement
2. Calculate your daily periodic rate
3. Calculate your average daily balance
4. Put it all together to determine your interest charge for the month

Paying more than the minimum each month will lower your interest charges. To avoid paying interest entirely, pay your balance in full each month. If that’s not possible, a low-interest credit card will save you money.

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2 comments

  1. Very clear, thank you!

    Reply
  2. I think your "Periodic Rate" is not correct. In order to arrive at $25.08, the "Periodic Rate" should be 0.00038% (at 14%). NOT, "0.038%"

    Reply

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