How to calculate APR on your monthly payments

Written by david montoya | 13/05/2017
How to calculate APR on your monthly payments
Credit card holders often use computer spreadsheets to manage debt and calculate APR. (Jupiterimages/Brand X Pictures/Getty Images)

APR, or annual percentage rate, is the percentage charged on accumulated debt. APR calculations are not compound, meaning you're not charged on past accumulated interest. For example, if you owe £6.50 and accumulate 60p in APR interest in January, your APR in February only considers the £6.50 debt. Since APR is not compounded determining monthly APR only requires dividing the yearly APR rate listed on your billing statement. Apply the monthly percentage to the debt to determine how much you will pay in APR interest for each month.

Determine your yearly APR. This number should be listed on your monthly statement or, if not, you can call your credit card company.

Divide the APR number by 12 (the number of months in the year). For example, suppose your APR is 12 per cent. Divide this number by 12 to get 1 per cent.

Convert the percentage into a decimal by moving the decimal point two spots to the left. In the current example, the monthly APR is 1 per cent, which is a simplified version of 1.00 per cent. Move the decimal place over two spots to get .001.

Multiply your total debt by the converted percentage. Suppose your current debt is £65. Multiply this amount by .001, the monthly APR rate in the current example. The result is 60p. Thus, for the current month, you paid 60p in APR fees.

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