The finance charge is the cost of borrowing for the period. Card issuers usually calculate it on the average daily balance, and some use 360 days instead of 365, which slightly increases the charge.
How to use the Finance Charge Calculator
- Balance (average daily)
- APR
- Days in the billing cycle
- Day-count basis
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the balance (or average daily balance), the APR, the days in the billing cycle and the day-count basis.
Tips
- Compare loans by APR and total cost, not just the monthly payment.
- Extra payments go straight to principal and can save a lot of interest.
- Pay off the highest-rate debt first if you want to save the most money.
- Check for prepayment penalties before paying a loan off early.
Common mistakes to avoid
- Stretching a loan term to lower the payment without seeing the extra interest.
- Paying only the minimum on credit cards.
- Forgetting fees that are rolled into the loan.
Inputs explained
| Field | What to enter |
|---|---|
| Balance (average daily) | Amount in your currency |
| APR | In % |
| Days in the billing cycle | A number |
| Day-count basis | Choose one: 365 days, 360 days |
What each result means
- Finance charge = [Balance (average daily)]×[APR]÷100÷[Day-count basis]×[Days in the billing cycle]
- New balance = [Balance (average daily)] + [Finance charge]
- Daily periodic rate = [APR]÷[Day-count basis]
Example values
How the main result changes when Balance changes and everything else stays at the example values above:
| Balance (average daily) | Finance charge |
|---|---|
| 1,250 | 21.58 |
| 1,875 | 32.36 |
| 2,500 | 43.15 |
| 3,125 | 53.94 |
| 3,750 | 64.73 |
| 5,000 | 86.3 |
Formula
Finance charge = balance × APR ÷ 365 × days in billing cycleNew balance = balance + finance chargeWorked example
Inputs — Balance (average daily): $2,500; APR: 21 %; Days in the billing cycle: 30; Day-count basis: 365 days.
Results — Finance charge = $43.15; New balance = $2,543.15; Daily periodic rate = 0.0575 %.
Frequently asked questions
What is a finance charge?
The interest and fees charged for borrowing during a period.
How do I avoid finance charges?
Pay the full statement balance by the due date.
Is the finance charge the same as interest?
It includes interest and may include other borrowing fees.
What formula does the Finance Charge Calculator use?
Finance charge = balance × APR ÷ 365 × days in billing cycle.