How to Compare Credit Card Interest Rates With a Calculator

Find out the interest rate with a calculator.

There are literally hundreds of credit cards available for personal and business use, all of which carry their own particular interest rate. The interest rate is the amount you pay on top of every monthly balance that you don't pay in full. The smallest change in interest rate can have a huge effect on the additional amount you owe each month.

Instructions

1. Take a figure you are usually left with as a balance on the end of every month (for example purposes, take $1,000). If your balance varies from month to month, you may want to average out the last six months' balances. To do so, add in the final balances for each month on your calculator, and then divide it by six. This gives you your average monthly balance.

2. Look at the interest rate for two different cards. Once can have 12 percent, while the other may be 16 percent.

3. Punch in "1,000" into the calculator.

4. Multiply it by .12 (or 12 percent). This comes out to be 120, or $120 extra every month you pay on interest with a 12 percent interest rate. If you multiply 1000 by .16, you end up with $160.

References

• Peregrin.edu: Calculating Interest Rates PDF