# Help on calculating credit card interest

Below is a summary of my current statement Apr 21 2019 - May 2019:

The APR is 25.24% I had a promotional 0% APR till Apr 20.

I have tried my best to calculate the interest mentioned but I simply cannot get it right. I know the balance subject to the interest rate was \$1217.95. Can someone help me figure out how this \$1217.95 was calculated OR how the interest summed up to \$25.26 based on the daily transactions.

• How did you arrive at the amount \$1217.95 as the balance subject to interest? May 21, 2019 at 21:52
• @perennial_noob: It's probably printed on his statement, "Average Daily Balance subject to Interest" May 22, 2019 at 4:21
• Now that your 0% is done, 25% APR is pretty high by today's standards unless you have low credit scores (deemed higher risk) or made late payment, exceeded credit limit, etc. Pay off the balance ASAP or get a better card if your credit will allow that. May 22, 2019 at 19:27

From your question it seems like you are attempting to calculate the total interest based on one cut-off amount whereas credit cards calculate the interest on a daily basis. They arrive at DPR (Daily Periodic Interest Rate) by either dividing your Annual Percentage Rate (APR) by 360 or 365.

So in your case it is `0.071%` or `0.069%` based on how your card company calculated it. This is used to find the interest on the previous unpaid balance. Remember, also, that there is a cutoff (usually mentioned by the company, for ex, midnight of a date at Eastern Time). So it may look like you paid on a given day (based on your transaction time in the time zone) but it reflects as payment on the following day if it is after the deadline specified.

For ex, if at the end of the first day of your 0% APR expiry your balance is \$1000, then assuming 365, your interest for that day is going to be \$0.69. If you maintain this same balance until the next billing cycle the interest you'll end up paying will be (assuming 30 days in that month), \$20.7 (and odd cents).

If on the 10th day you spent another \$1000 then your interest for the first 10 days is the same but your interest for the last 20 days each day will be \$1.38 and your total interest will be \$34.5

So on a day to day basis you accumulate interest which gets summed up on the day the statement is finalized. That is how they arrived at \$25.XX

In the same excel sheet you could create another column that calculates the DPR and add it up. You may be off but that again depends on when the cutoff starts and ends.

To calculate your average daily balance, you have to calculate the balance on your account for each day in the billing period. Then add all these up and divide by the number of days in the billing period.

Bear in mind that if you don't have any changes to your balance one day, that day still "counts". The balance for that day will be the same as the balance for the previous day. So in your example above, your balance for April 17 will be the same as your balance for April 16, April 21 is the same as April 20, etc.

You also have to know exactly which days are included in the billing period. This should be printed on your statement. A credit card bill is typically for about 30 days, sometimes a day or two more or less depending on how they do their schedule, so you should have about 30 numbers to average together.