Credit cards can be useful tools for making purchases. They allow the transfer of money instantly across the Internet and pay off of grocery bills with the swipe of a card. At the same time, they can be a tricky. If you pay your credit card in full, then you pay whatever your closing, or ending, balance is, but if you pay the minimum or anything less than full, you will be hit with a finance charge relative to your interest rate. So prepare yourself for extra fees by predetermining the amount of interest you will pay.
Step 1
Locate your closing balance--the total amount of credit card debt accumulated by the end of the billing cycle--and subtract any payments you made. If you do not make a payment, or make a late payment, you may be hit with a penalty fee.
Step 2
Determine your credit card's APR, or annual percentage rate. This details how much you have to pay yearly in interest fees. It should be clearly visible somewhere on your bill, usually between 7 and 35 percent. Most credit cards grant you a grace period of 20 to 25 days to pay off your outstanding balance before charging you with an interest fee.
Step 3
Calculate how much interest you have to pay for your credit card. For example, consider that your closing balance was $3,750 on a credit card with an APR of 18 percent. You make a payment of $550, so your adjusted balance is now $3,200. To calculate your interest fee, you will do the following: (adjusted balance) x (APR as a proportion) / 12. In this example, your interest fee will be 3,200 x 0.18 / 12 = $48.
Note: You divide your APR by 12 to determine how much interest you pay monthly, taking the yearly rate and splitting it into 12 months. To convert your APR from a percent to a proportion, divide by 100.
Things You'll Need
- Calculator
- Account Statement
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