Short answer
Credit card interest = average daily balance × (APR ÷ 365) × days in the cycle. At 24.99% APR on $5,000, that is about 0.0685% a day and $102.70 over 30 days.
1. The formula
- Daily periodic rate (DPR) = APR ÷ 365
- Interest for the cycle = average daily balance × DPR × days in the cycle
2. Worked example
$5,000 at 24.99% APR. DPR = 24.99 ÷ 365 = 0.0685%. Over 30 days: 5,000 × 0.0685% × 30 = $102.70.
3. Quick estimate
Balance × APR ÷ 12 is close: 5,000 × 24.99% ÷ 12 = $104.12. Use the daily method when you want the exact figure for your cycle.
4. Monthly interest by balance and APR
| Balance | 15% APR | 19.99% APR | 24.99% APR | 29.99% APR |
|---|---|---|---|---|
| $1,000 | $12.50 | $16.66 | $20.82 | $24.99 |
| $2,500 | $31.25 | $41.65 | $52.06 | $62.48 |
| $5,000 | $62.50 | $83.29 | $104.12 | $124.96 |
| $10,000 | $125.00 | $166.58 | $208.25 | $249.92 |
5. Grace period
If you pay the full statement balance by the due date, most cards charge no interest on new purchases. Carrying a balance usually ends that grace period.
6. Frequently asked questions
How is credit card interest calculated?expand_more
Average daily balance × APR ÷ 365 × days in the billing cycle.
What is a daily periodic rate?expand_more
The APR divided by 365.
Is interest compounded?expand_more
Most cards add interest to the balance, so it can compound daily or monthly. Check your card agreement.
How can I avoid interest?expand_more
Pay the full statement balance by the due date, if your card offers a grace period.
7. Sources
- menu_bookCFPB: What is a minimum payment?
- menu_bookCFPB: Credit cards
- menu_bookFederal Reserve: Consumer credit