How to Calculate Finance Charges on a Credit Card

Are you curious to know the cost of the credit card bills that is due in the following days? If you want to know the amount of your following credit card bill, you will have to use a bit of brain, some technical financing techniques and a calculator to evaluate the value that might be used in the budget preparation for the next month. Being lethargic won’t help at all. You will have to proactive and show a bit of willpower to perform some simple financing calculations that will save you a lot of hassle and tension that might have crept in due to the following unknown but haunting credit card bill.


  • 1

    Find the last bill that you paid and check the amount due on that bill. Calculate the interest rate (not the APR) of the last bill of your credit card.

  • 2

    Be careful about the number of days used to calculate the interest rate because some firms takes 365 days a year for the calculation of interest but the rest probably calculate it over 360 days cycle. However if you can’t find that information, use the former figure with a 30 days billing cycle.

  • 3

    The overall interest rate should be divided by the number of days used in the cycle of billing credit card like 360 or 365, whichever applies in your case. The number that you will get is the percentage of interest that is applied on the daily basis on your transactions that take place via credit card.

  • 4

    The daily interest rate should be multiplied by the billing cycle days that will result in a period interest rate.

  • 5

    Check the balance you owed to the credit card provider in the last bill and multiply the periodic interest rate figure. The amount that will appear on the calculator is the finance that will be charged from you in the next credit card bill.

  • 6

    Evaluate that whether the credit card finance on your bill is being calculated with the stated method of on average daily balance. If the latter is true, repeat the first three steps again keep the rest of the figures same.

  • 7

    Sum up the amount that was due, each day of the last billing period. When you get the figure, just divide it by the number of days in the billing period that will give you an estimated figure of your next bill.

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