Credit Card Interest Calculator

Last updated July 2, 2026

Credit card interest is calculated daily using a method the CARD Act requires issuers to disclose, and understanding the mechanics reveals why minimum payments are so ineffective at reducing balances. The annual percentage rate is divided by 365 to produce a daily periodic rate — a 22 percent APR becomes 0.0603 percent per day. That rate is applied each day to the outstanding balance, with accrued interest added to the principal at the end of the billing cycle. The result is compound interest that accumulates at a rate that feels invisible on a monthly statement but adds up dramatically over months and years.

The average credit card APR in 2026 runs approximately 21.5 percent for new offers and 24 to 29 percent on existing variable-rate cards that have adjusted with the rate environment. The minimum payment trap is the defining feature of credit card debt: a $5,000 balance at 22 percent with a minimum payment of 2 percent of the balance — approximately $100 per month — takes over 22 years to pay off and generates more than $7,000 in interest along the way. A fixed monthly payment of $200 instead pays the same balance off in 31 months and costs $1,180 in interest. The $100 monthly difference eliminates more than $5,800 in interest charges and reduces the payoff timeline by 20 years — one of the most dramatic illustrations in personal finance of how small payment changes compound over time.

The calculation shows the true cost of your credit card balance at your actual APR, using your actual monthly payment. The difference between minimum-only payments and a modest fixed payment above the minimum is often tens of thousands of dollars over the lifetime of the debt. If your payment schedule extends beyond 3 years on any credit card balance, the interest cost alone justifies aggressive payoff or a balance transfer to a lower-rate option.