How to calculate credit card interest per month

Written by michael keenan
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How to calculate credit card interest per month
Beware of credit cards with high interest rates. (credit card image by jimcox40 from

Credit cards provide a very easy way to pay for your purchases: just swipe the card and you're on your way. However, if you aren't careful you may end up charging more than you can pay off at the end of the month. If you cannot pay your balance in full, your creditor will charge you interest on the balance that is left on your card. In order to calculate how much interest will be charged each month, you need to know your outstanding balance and the annual interest rate on your credit card.

Skill level:
Moderately Easy

Things you need

  • Calculator

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  1. 1

    Look up your annual interest rate in your credit card agreement or contact your creditor to find out the rate.

  2. 2

    Divide the annual interest rate by 12 to find the monthly interest rate. For example, if the annual interest rate on your credit card is 21 per cent, you would divide 21 per cent by 12 to find the monthly rate would be 1.75 per cent.

  3. 3

    Divide the monthly interest rate expressed as a percentage by 100 to convert it to a decimal. Continuing the example, you would divide 1.75 per cent by 100 to get 0.0175.

  4. 4

    Multiply your outstanding credit card balance by the monthly percentage rate expressed as a decimal to calculate the amount of interest you will owe per month. Continuing the example, if you had a balance of £1,950, you would multiply £1,950 by 0.0175 to get £34.10.

Tips and warnings

  • Read the fine print on your credit card agreement to determine how compounding affects the actual interest rate you will be charged.

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