Credit Card Interest Calculator

Daily charging, monthly compounding

A 22.5% APR is divided by 365 to get the daily rate the card applies to your balance each day. The interest accrues daily, and because it is added straight back to the balance, the next day’s interest is computed on a slightly larger number - that compounding is what makes the total grow a little faster every day it is left alone.

Over a 30-day billing cycle, a $5,000 balance at 22.5% costs roughly $93 of interest. Leave the same balance for a full year and the daily compounding pushes the interest to about $1,258 - more than a flat 22.5% of the original balance, because the interest itself earned interest along the way.

The number you can act on

The page translates the annual rate into the daily interest on your balance - often a few dollars that add up invisibly across a statement - and into the monthly interest, which is the payment you need to at least match just to stop the balance growing.

That second number matters more than it looks. Pay less than the month’s interest and the balance actually climbs even though you are sending money every month, because the charge outruns your payment. The page makes the exact threshold visible, so a payoff plan starts from a number that genuinely works rather than one that quietly loses ground.

How long compounding needs

Short periods look almost linear, which is why a day or a week of interest can seem trivial - and why it is tempting to keep putting the payment off. The compounding shows up clearly on longer carries, where each day’s interest is computed on a bigger balance than the last.

The page shows the balance after 1, 7, 30, 90 and 365 days so you can see the curve bend as the window lengthens. Seeing that shape is the point: it makes the cost of deferral concrete and supports deciding whether to clear the balance before it runs into the steep part of the curve.

What each input really sets

Three numbers shape the answer. The balance is the starting total the rate grinds on - this page prices interest on the whole carried balance, not on new purchases separately. The APR is quoted as a yearly figure but divided by 365 to charge daily. The days are how long the balance is carried, and they only ever count whole days, so a single day costs exactly a single day of interest.

The model stays honest about its edges: it assumes the rate holds for the whole window and prices interest only. It does not add a late fee, a jump to a penalty APR or the effect of payments you might make along the way - each of those is a separate cost that would move the real number, and none of them change the shape of the daily charge the page is built to show.

A month is not a twelfth of a year

Charging daily makes the month a real length instead of a fraction: 365 divided by 12 is 30.42 days. On $5,000 at 22.5% the daily charge is $3.08, so 30 days cost $93.30, while a clean twelfth of the annual charge would be $93.75 - the month is shorter, not cheaper.

Carried for a full year the charge is $1,261.18, which is $141.62 more than twelve of those 30-day months at $1,119.56. The extra comes from the days a calendar month does not have and from compounding on a balance that has already grown, which is why a balance left alone drifts further than the APR divided by twelve suggests.

Twelve 30-day months are the version of a year a monthly statement implies; the calendar charges for the rest, and the page always charges for the days you typed rather than for a tidy month.