Calculating finance charges on your credit card is a good way to keep on top of your debt. Knowing the impact of your interest rate can help you pay off your balance faster and keep better control of your debt. Many financial institutions calculate your finance charges on a daily basis and credit it to your account monthly. There are online calculators that can simplify the calculations, but they can be done with any basic calculator.
Step 1
Look at your last statement and note your current balance. Your current balance includes your last payment and any new charges plus finance charges.
Step 2
Find the annual interest rate on your statement and write it down.
Step 3
Take the annual interest rate and divide it by 12. This number will be your monthly interest rate. For example, 10.5% APR is .00875% interest per month.
Step 4
Multiply the monthly interest rate by your current balance. If you plan to make a payment make sure to subtract that amount before calculating the interest. For example, my current balance is $500, and I plan to pay $100 this month therefore I will be charged interest on $400. $400 X .00875% = $3.50 in finance charges.
Step 5
Add the finance charge to the current balance. This will be an estimate of your next bill. $400 + $3.50 = $403.50.
Things You'll Need
- Calculator
- Last Statement
- Interest Rate
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