Credit Card Finance Charge Calculator
Enter your APR, the length of your billing cycle and the purchases and payments you made. The calculator works out the average daily balance, the daily periodic rate and the finance charge your card issuer adds for that cycle.
Purchases and payments in this cycle
Day 1 is the first day of the billing cycle. A purchase or payment changes the balance from that day to the end of the cycle.
Finance charge
$24.33
Average daily balance
$1,233.33
Daily periodic rate
0.065753%
Ending balance before interest
$1,000.00
$1,233.33 average daily balance × 0.065753% daily rate × 30 days = $24.33. Charging interest on the day 1 balance alone (the previous balance method) would give $23.67.
| Days | Balance | Number of days | Balance × days |
|---|---|---|---|
| 1-10 | $1,200.00 | 10 | $12,000.00 |
| 11-20 | $1,500.00 | 10 | $15,000.00 |
| 21-30 | $1,000.00 | 10 | $10,000.00 |
| Total | 30 | $37,000.00 |
Days with a credit balance count as zero. The result assumes you carried a balance into this cycle, so no grace period applies.
How to use the Finance Charge Calculator
- Enter the purchase APR and the number of days in the billing cycle. Both usually appear on your monthly statement.
- Type the balance on day 1 of the cycle. If you carried a balance from last month, that is the new balance on your last statement.
- Add each purchase and payment with the day of the cycle it posted. Day 1 is the first day after your last statement closed.
- Choose 365 or 360 days per year. Your card agreement says which one your issuer uses. If you can't find it, leave 365.
- Read the finance charge, the average daily balance and the daily rate. The table under the results lists each balance and how many days it lasted.
The average daily balance formula
Finance charge = Average daily balance × (APR ÷ 365) × Days in cycle
The average daily balance is the sum of every day's balance divided by the number of days in the cycle. APR ÷ 365 is the daily periodic rate. Some issuers divide by 360, which raises the rate slightly. Because the days cancel out, the charge also equals the sum of the daily balances times the daily rate.
Worked example
A 30-day cycle starts with a $1,200 balance at 24% APR. You buy $300 on day 11 and pay $500 on day 21. The balance is $1,200 for 10 days, $1,500 for 10 days and $1,000 for 10 days, so the daily balances add up to $37,000 and the average daily balance is $37,000 ÷ 30 = $1,233.33. The daily rate is 0.24 ÷ 365 = 0.065753%. Finance charge = $1,233.33 × 0.00065753 × 30 = $24.33. These are the calculator's default inputs, so you can follow each step above.
How the average daily balance method works
Your card issuer records the balance at the end of every day in the billing cycle. A purchase raises it from the day it posts and a payment lowers it from the day it posts. The issuer adds up those daily balances, divides by the number of days, and charges the daily periodic rate on that average for every day of the cycle.
Timing matters as much as the amount. A $500 payment on day 5 of a 30-day cycle lowers the balance for 26 days. The same payment on day 28 lowers it for 3 days. At 24% APR the early payment saves $7.56 more interest in that cycle.
Regulation Z defines the finance charge as "the cost of consumer credit as a dollar amount", and that can include service and transaction charges as well as interest (12 CFR 1026.4). This calculator works out the interest. Add any fees from your statement on top.
| Days | What happened | Balance | Days at balance | Balance × days |
|---|---|---|---|---|
| 1-10 | Starting balance | $1,200.00 | 10 | $12,000.00 |
| 11-20 | $300 purchase on day 11 | $1,500.00 | 10 | $15,000.00 |
| 21-30 | $500 payment on day 21 | $1,000.00 | 10 | $10,000.00 |
| Total | 30 | $37,000.00 |
365 or 360 days: why the divisor changes the charge
The daily periodic rate is the APR divided by the days in a year. With 365, a 24% APR gives a daily rate of 0.065753%. With 360 it gives 0.066667%, so every finance charge comes out 1.39% higher.
In the worked example a 360-day year raises the charge from $24.33 to $24.67. That is 34 cents on one statement, and it repeats every month you carry a balance. Your cardholder agreement explains how the issuer calculates interest, so check there which divisor it uses.
Textbook examples sometimes use APR ÷ 12 as a monthly rate. That matches the daily method only for a cycle of 365 ÷ 12, about 30.4 days. A 31-day cycle costs a little more and a 28-day cycle a little less.
The grace period: when there is no finance charge
The CFPB describes a grace period as "the period between the end of a billing cycle and the date your payment is due" and says you may not be charged interest during it "as long as you pay your balance in full by the due date." Regulation Z requires card issuers to have procedures so that statements are mailed or delivered at least 21 days before the payment due date (12 CFR 1026.5(b)(2)(ii)).
Pay less than the full statement balance and you pay interest on the unpaid part. According to the CFPB, you are then also charged interest on new purchases from the date each one is made. Grace periods generally don't apply to cash advances, which accrue interest from the transaction date.
The calculator assumes you carried a balance into the cycle, so every day counts. If you paid last month's statement in full and pay this one in full by the due date, your purchase interest for the cycle is normally zero.
A second example with an early payment
A 31-day cycle starts at $2,500 with a 19.99% APR. You pay $1,000 on day 5 and buy $150 on day 20. The balance is $2,500 for 4 days, $1,500 for 15 days and $1,650 for 12 days. The daily balances total $52,300, so the average daily balance is $52,300 ÷ 31 = $1,687.10.
The daily rate is 0.1999 ÷ 365 = 0.054767%, and the finance charge is $1,687.10 × 0.00054767 × 31 = $28.64. Charging the day 1 balance for the whole cycle, the way the previous balance method works, would give $42.44. The calculator shows that previous balance figure under the result so you can compare the two.
Two-cycle billing is not allowed
Some issuers used to average balances over two billing cycles. Regulation Z now prohibits card issuers from imposing finance charges on "balances for days in billing cycles that precede the most recent billing cycle" (12 CFR 1026.54). Your finance charge should reflect days in the current cycle only, and that is what this calculator measures.
Why your statement can differ by a few cents
Some card agreements compound daily, adding each day's interest to the next day's balance. On $1,000 at 24% APR for 30 days that gives $19.92 instead of the $19.73 this calculator shows. Other differences come from a minimum interest charge, separate APRs for purchases and cash advances, or a transaction posting a day or two after you made it. Your card agreement describes the method your issuer uses.
Once you know the charge for one cycle, these pages show what it adds up to over time:
Frequently asked questions
How do you calculate a finance charge on a credit card?
Add up the balance for each day of the billing cycle and divide by the number of days to get the average daily balance. Multiply that by the daily periodic rate, which is the APR divided by 365, and then by the days in the cycle. A $1,233.33 average daily balance at 24% APR over 30 days gives a $24.33 finance charge.
Is a finance charge the same as interest?
Not always. Regulation Z defines a finance charge as the cost of credit in dollars, and that can include service and transaction charges as well as interest (12 CFR 1026.4). This calculator works out the interest part. Add any fees from your statement on top.
How do I avoid a finance charge on my credit card?
Pay the full statement balance by the due date. The CFPB says that during the grace period you may not be charged interest as long as you pay your balance in full by the due date. Cash advances are the exception, because grace periods generally don't apply to them and interest starts on the transaction date.
What is the finance charge on a $1,000 balance?
It depends on the APR and the length of the cycle. A $1,000 balance held for a 30-day cycle costs $19.73 at 24% APR and $16.44 at 20% APR, using a 365-day year. A payment during the cycle lowers the charge, because it lowers the average daily balance.