How to Calculate Annual Percentage Rate on a Credit Card
The annual percentage rate or APR of a credit card is the finance charge expressed as an annual rate. The APR represents the total cost of borrowing the money and includes the percentage of interest paid annually and all costs and fees associated with the credit card. You can calculate the APR for your credit card by applying a simple mathematical formula.
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Instructions
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1
Find the amount of interest in dollars charged by your credit card. You can find this information on your monthly billing statement or by calling your credit card company. Also, find the amount of any fees or charges for the current billing cycle. Add these figures together. For example, if your interest charge was $52.50 and you were charged an over-the-limit fee of $39 and a late fee of $29, your total monthly borrowing cost in dollars is $52.50 + $39 + $29 = $120.50.
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2
Find the total outstanding balance of your credit card. You can also find your total outstanding balance figure on your monthly billing statement or by calling your credit card company. Continuing the same example, assume your total outstanding balance is $3,500.
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3
Divide the total monthly cost figure by the total outstanding balance figure. Continuing the same example, $120.50/$3,500 = 0.0344.
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4
Multiply the figure from Step 3 by 12 -- the number of months in a calendar year. Continuing the same example, 0.0344 x 12 = 41.31 percent. This figure is the actual APR you are paying on your credit card in the current month. Note that this figure can be substantially higher than the APR figure initially quoted by your credit card company.
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