Finance Charge Calculator
Estimate the finance charge on a credit-card balance. Enter your average daily balance in dollars, the APR as a percent, and the days in the billing cycle to see what carrying the balance costs per cycle, per day, and per year.
Example: with Average daily balance ($) 3000 · APR (%) 24 · Days in billing cycle 30 → Finance charge: $59.18 this billing cycle.
- Daily rate & cost0.0658% daily periodic rate · $1.97 per day
- Yearly cost of this balance$720 per year if the balance never drops
Computed by the calculator below using its default values. Change any input to see your own numbers.
Finance charge = average daily balance × (APR ÷ 365) × days in cycle — the average daily balance method most US card issuers use.
What a finance charge is
A finance charge is the dollar cost of borrowing on your card for the cycle — interest plus certain fees, as defined by the Truth in Lending Act. The interest part is what this tool models: your issuer converts the APR to a daily periodic rate (APR ÷ 365), tracks your balance every day, and charges that rate on the average of those daily balances.
That average daily balance is why the timing of payments matters. A payment made on day 3 of the cycle shrinks 27 days' worth of balance; the same payment on day 27 barely moves the average.
How to pay zero
Most cards give a grace period on purchases: pay the full statement balance by the due date and no finance charge applies to those purchases at all. Carry even a small balance, though, and interest typically accrues on new purchases from day one until you post two consecutive full payments.
Cash advances are harsher — they usually accrue from the day of the advance, at a higher APR, with no grace period. If your statement's finance charge looks bigger than this estimate, a cash advance or a lost grace period is the usual culprit.
How it’s calculated
Finance charge = average daily balance × (APR ÷ 365) × days in the billing cycle — the average daily balance method stated as the modeled convention. Daily periodic rate = APR ÷ 365 (a few issuers divide by 360, which charges slightly more per day). Yearly figure = balance × APR, simple interest without compounding. All results are pre-tax estimates of interest only, not fees.
Your statement can differ: mid-cycle payments and purchases change the true average, some issuers compound daily, and cash advances or a lost grace period accrue differently.
Monthly finance charge on a $3,000 average balance (30-day cycle)
| APR | Finance charge | Per day |
|---|---|---|
| 18% | $44.38 | $1.48 |
| 22% | $54.25 | $1.81 |
| 24% | $59.18 | $1.97 |
| 28% | $69.04 | $2.30 |
| 29.99% | $73.95 | $2.46 |
Computed with charge = $3,000 × (APR ÷ 365) × 30; rounded to cents.
Common mistakes
- Using your current or statement-end balance instead of the average daily balance — a big late-cycle payment makes them very different numbers.
- Entering a monthly rate in the APR box; a 2% monthly rate is a 24% APR.
- Assuming purchases always get a grace period — carry a balance and new purchases usually accrue interest immediately.
- Comparing cycles of different lengths as if equal: a 31-day cycle charges about 3% more than a 30-day one at the same APR.
Frequently asked questions
How is a finance charge calculated?
With the average daily balance method: finance charge = average daily balance × (APR ÷ 365) × days in the cycle. A $3,000 average balance at 24% APR over 30 days costs $59.18.
What exactly counts as a finance charge?
Under the Truth in Lending Act it's the total dollar cost of credit — interest plus certain required fees such as cash-advance or balance-transfer fees. This calculator models the interest portion.
How do I avoid finance charges entirely?
Pay the full statement balance by the due date every month. Grace periods on purchases mean no interest accrues at all when you do — the trap is that carrying any balance usually forfeits the grace period on new purchases.
What's the difference between APR and the daily periodic rate?
The daily periodic rate is simply APR ÷ 365 — a 24% APR is 0.0658% per day. Issuers apply the daily rate to each day's balance, which is why the same APR costs more in a 31-day cycle than a 28-day one.
Why doesn't this match my statement to the penny?
Issuers differ in the details: some divide by 360, some compound daily, and your true average daily balance depends on the exact days purchases and payments posted. Treat this as a close estimate, not a reconciliation.