How to Calculate the Interest on an Expense Credit Card
Most expense credit cards list their interest percentages in annual terms. For example, a $1,000 balance on your credit card at 12 percent annual percentage interest rate (APR) means you will pay an added $120 if the amount is unpaid for a year. Your credit card company calculates your interest using a fractional percentage of a daily rate derived from your APR. Since the credit card company also has precise information as to when charges actually debited, it's impossible to calculate what their interest charges will be to the penny. You can get an excellent estimate of your monthly interest by calculating from the annual figure.
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Instructions
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Tally the total amount of your unpaid balance and purchases. Many credit companies offer a grace period in which they charge no interest as long as the balance is paid off in full each month. Check the terms of your card. Generally, if you are carrying a balance each month, you will be accruing interest.
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Check your credit card statement to determine the annual interest rate, or APR.
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Multiply the total of your unpaid expenses charged to the card by the APR. For example, if you have $2,400 in expenses, and the APR is 10.99 percent, the annual interest is $263.76.
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Divide the annual interest by 12 to get an approximation of the monthly interest. In this example, the estimated amount you would pay in interest each month on your unpaid balance is $21.98.
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References
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