How is credit card interest calculated?

Interest is calculated daily on your average daily balance. The daily rate is your annual rate ÷ 365. This compounds, meaning you pay interest on interest.

Why does paying the minimum take so long?

Minimum payments are designed to cover mostly interest with little going to principal. At 20% APR, a $5,000 balance with minimum payments takes over 20 years to clear.

Do I pay interest if I pay in full each month?

No! If you pay your statement balance in full by the due date, you won't pay any purchase interest. This is the interest-free period (usually 44-55 days).

Credit Card Interest Calculator

Calculator

Calculate how much interest you're paying on your credit card balance

Free to useNo data storedAI insightsUpdated: February 2026

Credit card interest compounds daily and adds up fast. This calculator shows you exactly how much you're paying in interest and how long it will take to become debt-free.

Enter Your Details

Real-World Examples

$5,000 Balance at 20%

$5,000 balance at 20% APR, paying $200/month with no new purchases.

Inputs Used:

balance:5,000rate:20payment:200

Time to payoff: 32 months. Total interest: $1,364. If you only paid minimum ($100): 9+ years and $5,840 interest!

Frequently Asked Questions

Glossary

Purchase Rate

The interest rate charged on purchases when you don't pay your balance in full.

Daily Interest

Credit card interest is calculated daily (rate ÷ 365) and compounds.

Minimum Payment

Usually 2-3% of balance or $25, whichever is higher. Designed to maximize interest paid.

Related Tools

Balance Transfer Calculator

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Credit Card Payoff Calculator

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Card Comparison

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How to Use

1Enter your current credit card balance
2Add your card's interest rate (check your statement)
3Input your monthly payment amount
4Optionally add ongoing monthly spending
5See your true interest cost

Key Information

Average Australian credit card rate is 17-22%
Interest is calculated daily on your outstanding balance
Paying only the minimum can take 20+ years to clear debt
Interest-free periods only apply if you pay in full

Pro Tips

Always pay more than the minimum - even $50 extra helps
Consider a balance transfer to 0% card to stop interest
Stop using the card while paying down debt
Pay fortnightly instead of monthly to reduce interest

Avoid These Mistakes

Only paying the minimum payment
Continuing to spend while trying to pay off
Not understanding when interest-free period ends
Ignoring cash advance rates (often 22%+)

Disclaimer: This calculator provides estimates only and should not be relied upon for financial decisions. Interest rates, fees, and policies change frequently. Always verify information with lenders directly. This is general information, not personal financial advice. Consider seeking advice from a licensed mortgage broker or financial advisor.

Last updated: February 2026