Credit Card Interest Calculator

How credit card interest is actually calculated

Credit card interest looks mysterious on a statement, but the math is straightforward. Issuers use four inputs: your average daily balance, your APR, the number of days in the billing cycle, and whether your grace period applies. Each one moves the final number — sometimes by a lot.

• Grace period.If you paid your previous statement in full by the due date, your card's grace period waives interest on new purchases — your finance charge is $0. The moment you carry a balance from one cycle to the next, the grace period disappears and interest starts accruing on every new purchase from the day it posts.
• Average daily balance. Issuers add up your balance at the end of every day in the billing cycle and divide by the number of days. Pay early in the cycle and the ADB drops, lowering your interest. Wait until the due date and the ADB stays high.
• APR. Your annualized rate, divided by 365 to get the daily periodic rate. A 19.99% APR translates to roughly 0.0548% per day — small until it compounds across thousands of dollars and hundreds of days.
• Days in the billing cycle. Usually 28–31. The longer the cycle, the more days interest accrues.

Put it together and the formula is just: ADB × (APR ÷ 365) × days. That's it. The calculator above does this for you, plus projects what happens month after month if you're carrying a balance.

The minimum payment trap

If credit cards have a single most expensive feature, it's the minimum payment. It looks reasonable on a statement — a small, manageable number — but the math behind it is built to keep balances on the books for as long as possible.

What's actually in a minimum payment

Most issuers calculate the minimum as a small percentage of your balance — typically 1% to 3% — with a floor of around $10 to $30. Some cards add that month's interest and any fees on top, which is honest but barely changes the dynamic. A few cards (Capital One Canada is the most common example) skip the percentage entirely and use a flat minimum like $10. Either way, the payment is engineered to be small.

Why the math doesn't work in your favour

When you only pay the minimum, most of the payment goes straight back to the issuer as interest, and only a sliver chips away at the principal. As the balance shrinks, the percentage-based minimum shrinks with it — so the payment gets smaller every month, dragging the payoff out further. The effect compounds: smaller payments → less principal paid → more interest owed → smaller next payment. It's a treadmill, and it's deliberate.

The disclosure box on your statement

Most Canadian and U.S. statements now include a regulator-mandated box that says, in plain language, "If you make only the minimum payment, you will pay off this balance in X years and pay $Y in interest." Read that box. If your statement doesn't include one, check the issuer's online portal — the figures are usually the most honest line of communication a credit card company will print on a piece of paper.

Quebec's 5% rule

In Quebec, provincial law has been steadily ratcheting the minimum payment up for newer accounts — toward 5% of the balance as of 2025. The intent is exactly the math you just saw: a higher floor on the minimum payment dramatically reduces the time consumers stay in debt. Other Canadian provinces and U.S. issuers are not bound by the same rule, but the lesson generalizes — pay more than the minimum.

What happens if you miss a minimum payment

Three things can happen, often in sequence: a late fee (typically up to $40 in Canada and up to $30–$40 in the U.S.), a hit to your credit score if the payment is more than 30 days late, and — at 60+ days late — a penalty APR that can push your rate to 29.99% or higher and stick around for at least six months. The cheapest minimum payment is the one you make on time, every time, even if you can only afford the floor.

How to actually pay less interest

The cheapest path is always the same: don't carry a balance. The grace period was designed exactly for this — pay in full, never pay a cent of interest. If you're already carrying a balance, here's what actually moves the needle, ordered roughly by impact.

• Pay more than the minimum — even a little. Adding $50 or $100 a month to the minimum can knock years off the payoff and thousands off the total interest. The calculator above will tell you the exact numbers for your situation.
• Pay multiple times per month. Because interest is calculated on the average daily balance, paying twice a month — once mid-cycle, once near the due date — pulls your ADB down faster than a single big payment on the due date.
• Move the balance to a 0% intro APR card. A balance transfer card with 6–18 months at 0% can interrupt the interest entirely, letting every dollar of payment go to principal. Watch the transfer fee (usually 3–5%) and have a payoff plan before the promo expires — otherwise you just swap one APR for another.
• Call and ask for a lower APR.If your account is in good standing and you've been a customer for a while, issuers can — and often do — drop the rate by 2–5 percentage points on request. It costs nothing to ask and the call is rarely longer than 10 minutes.
• Consolidate with a personal loan or line of credit. Unsecured personal loans typically run 8–15% APR, line of credit rates are often even lower. Rolling a 19.99% card balance into a 10% loan can roughly halve the interest you pay over the payoff period.
• Pick a payoff method and commit to it. Avalanche (highest APR first) saves the most money mathematically. Snowball (smallest balance first) saves the most motivation. Either beats paying minimums across multiple cards forever.

Your card has more than one APR

The number on the front of the card disclosure is the purchase APR — but most cards quietly run several rates in parallel. Knowing which one applies to which transaction is half the battle.

• Purchase APR. The headline rate. Applies to everyday purchases, and the only one your grace period covers when you pay in full.
• Cash advance APR. Withdrawing cash from an ATM with your credit card. Usually several points higher than the purchase APR, and the kicker: no grace period. Interest accrues from the moment the cash leaves the machine. Avoid unless absolutely necessary.
• Balance transfer APR. What you pay on balances moved from another card. Often a promotional 0% for 6–18 months, then it reverts to the standard rate. The best 0% offers are how disciplined cardholders break out of the minimum-payment trap.
• Penalty APR.Triggered if you're 60+ days late on a payment. Often 29.99% and applied to your entire balance. It's usually the single most expensive thing your card can do to you, and the trigger is missing one payment.
• Promotional / introductory APR.Time-limited rates on new purchases or transfers. Set a calendar reminder for the day before they expire — that's the day to finalize your payoff plan, not the day after.