How to Calculate a Credit Card Payment

You can easily calculate your monthly credit card payment.

Calculate your credit card payment using simple interest calculations and figure out how much interest your credit card providers are charging you. Learn to calculate your credit card payment and you will be more informed about the way the credit system works and more prepared to avoid debt and stay on top of your credit.

Instructions

1. Ask your credit card carrier about the formula it uses to calculate credit card payments. The company should be able to tell you which type of credit card payment formula it uses, and you can use this to figure out your credit card payments yourself. Most credit card companies use a payment formula that uses your average daily balance to calculate interest on your balance. Finding out more about your credit card payment calculations can help you avoid credit card debt.

2. Figure out your average daily balance. Most credit card companies will list this on your credit statement or you can figure it out yourself. Divide the balance for a credit card statement by the number of days contained in that statement to find out the average daily balance. For instance, if your credit card statement covers 30 days and you spend $3,000, you will end up with an average daily balance of $100 for this period.

3. Use your average daily balance to figure out your interest rate. Divide your credit card APR by 12 to get your credit card monthly rate, then multiply by your average daily balance to get your interest rate.

4. Calculate your minimum monthly payment. Simply add your monthly interest to your monthly balance. Your minimum payment is generally a small percentage of your credit card bill, something like 3 percent. Consult your credit card statement to find out the exact amount, then use your credit card balance at the end of a payment period, plus interest, to calculate your credit card minimum payment. For instance, if you have a credit card balance of $1,000 and an interest amount of $10 and you pay a 3 percent minimum, then you will need to pay 3 percent of $1,010 or $30.30.

5. Use an online credit card payment calculator to double-check your work if you are uncertain. Also, talk to a financial specialist who can function as a credit card payment calculator and talk to you about simple interest calculations.

Tips & Warnings

• Try paying more than the minimum payment each month.

• Avoid paying late.

References

• Bankrate: Credit Card Calculator