Interest Calculator

$
5% 40%
1 Month 36 Months

Your Payment Summary

Principal Amount

$1,000.00

Total Interest

$180.00

Total Payment

$1,180.00

Monthly Payment

$98.33

Payment Breakdown

Month Payment Principal Interest Balance
Note: This calculator provides estimates only. Actual interest may vary based on your credit card terms, compounding frequency, and payment schedule. Always consult with your financial institution for precise calculations.

Credit Card Interest FAQs

Frequently asked questions about credit card interest

What is credit card interest?

Credit card interest is the fee charged by credit card issuers for borrowing money when you carry a balance past your grace period. It's calculated as a percentage of your outstanding balance and typically compounds daily. The interest rate is expressed as an Annual Percentage Rate (APR), which represents the yearly cost of borrowing on the card.

How is credit card interest calculated?

Credit card interest is typically calculated using the Daily Periodic Rate (DPR). Here's the process:

  1. Divide your APR by 365 to get the daily periodic rate
  2. Multiply your daily balance by the daily rate to get daily interest
  3. Add up the daily interest for each day in your billing cycle

For example, with an 18% APR: DPR = 18% ÷ 365 = 0.0493%. On a ₹10,000 balance, daily interest = ₹10,000 × 0.000493 = ₹4.93. Monthly interest would be approximately ₹4.93 × 30 = ₹147.90.

What is the minimum payment on a credit card?

The minimum payment is the smallest amount you must pay each month to keep your account in good standing. It's typically calculated as:

  • A percentage of your balance (usually 2-5%), or
  • A fixed amount (e.g., ₹500 or $35), whichever is higher

While making minimum payments avoids late fees, it extends repayment time and significantly increases total interest paid. For example, paying only the minimum on a ₹50,000 balance at 18% APR could take over 20 years to repay with substantial interest costs.

How can I avoid paying credit card interest?

You can avoid credit card interest by:

  1. Paying your balance in full by the due date each month
  2. Taking advantage of the grace period (usually 21-25 days after billing)
  3. Using 0% APR introductory offers responsibly
  4. Transferring balances to lower-interest cards
  5. Negotiating a lower rate with your card issuer

Remember that cash advances and balance transfers often incur interest immediately with no grace period.

What is the difference between fixed and variable APRs?

Fixed APRs remain constant unless the issuer provides advance notice (typically 45 days). However, they're not permanent and can change based on market conditions or your payment behavior.

Variable APRs fluctuate with an index interest rate (like the Prime Rate). When the index changes, your APR automatically adjusts. Variable rates are more common and often tied to the Prime Rate plus a margin.

Both types of APRs can change based on your payment history, credit score, or market conditions. Always review your cardholder agreement for specific terms.