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How does one calculate credit card interest for schedule C, line 16?

My wife has a home business and uses a credit card for the business. My understanding is that because we are using the cash method of accounting we can expense the interest that we paid on the card for last year.

However, looking at the statement I'm not sure how to determine the portion of each payment that was applied to interest or principal. There is a monthly finance charge of course, but my understanding of using the cash method of accounting is that we can expense what we actually paid toward the interest. So especially if we paid more than the minimum required amount or made several payments in a month, is there a simple way to calculate the portion of each payment that went towards the interest?

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  • Is it necessary for business reasons/cash flow etc for your wife to make only the minimum monthly payment each month? Or can she manage to pay off each monthly statement entirely and thus avoid finance charges entirely? Or is it a "business" credit card which features no grace period, and interest is charged from the date of purchase on each item she buys? If this last is true, perhaps she should shop around for a better credit card deal.
    – Dilip Sarwate
    Apr 13, 2019 at 20:36
  • She pays more than the minimum, but is unable to pay it off each month. The balance is high because it was used for initial start up expenses.
    – Frank
    Apr 13, 2019 at 21:45

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If you made at least the minimum payment each month, then the amount of interest (finance charge) indicated on the statement is the amount you paid.

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