How to calculate credit card interest

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.

[thecdoc]

Before the video, I was confused and after I'm still confuse 😕

[babaayman]

0:18

That is 0.00038, they removed two zeros and put a % sign.
If you don’t push the % on the calculator it’s going to be wrong.

% is horrible just put in the two zeros and get rid of the system.

[REDstrawbrry]

I've been confused for a long time before and I got fed up of being confused, so I went on to look for a video to explain it. It was a bit quick and heck, the explanation was really good! Kudos! (I dont usually comment on videos but I was just really impressed)

[The-D-Hoyt]

Don't forget the % sign when calculating everything together, or you'll end up with a crazy high minimum monthly payment.

[POPJack]

Short, simple and to the point. Love it.

[syameze]

Great video. Where can I get that calculation worksheet that was in the video?

[twktgsu]

Finally someone hasn't added zeros onto the interest divided by the amount of days/months

[KEVINSURIEL]

Is there a reason you are using average daily balances versus the amount you owed at the very end of the due date?

[hirodash]

Great video! Now where can I get the money to make payments on my credit cards?

[QuincyMalik]

Dont forget to drag the decimal back ! I wish u would mention that cause i literally forgot & the math wasnt adding up

[DanielMendez-lylp]

Finally somebody who uses examples and not someone makes a pointless video of their face

[shinlee]

No need to divide and multiply the days. That just cancels out. In this video example, just get $66, 000 and multiply it by the percentage.

[patrickmulligan]

I assume when you get the final number you divide by 100 to get the final number

[Stewwwwww]

I’m confused, say on day 1 of the monthly cycle I spend $500 then do not spend anything until the end of the circle. Would I get charged the same amount of interest if I spent $500 on day 29 of my circle instead of day 1? As from day 2-28 do they work out the interest on a daily basis?

[doctore]

hmmm... this is not compounded for each day.

[naimacakirlar]

Hello, I tried this on the calculator. I turned 14 % into a decimal (.14) then I divided it by 365 my answer was 3.3856. Simple math kills me, can you please tell me step by step which # goes in first to the calculator.

[criconinvestments]

Now I know why I've been so confused about it...

[Ryyy]

Hello, I’m confused as to why I get a slightly different number at the end. 14% (.14) /365 = 0.00038. Even when I turn that into a percent, 0.038 I end up getting 25.31 and not 25.08. Any idea why this would be the case?

[giannamccord]

Hi I'm a kid and I don't understand this. Will u do my work for me please

[silassouza]

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%"