How can I figure out how much I am going to owe each month in interest on my credit cards?

Question

I know they give daily interest and apy and that it's calculated with an average daily balance, but I don't know how to use all this information to figure our how much interest will be owed each month.

I'm actually looking for the math equation, if anyone can help me with that...

Answer 1

Look at your statement. Somewhere on there it will list "average daily balance". Ideally it will be "zero" because you paid off your complete balance the previous month. Also the statement will list the annual percentage rate. This rate is unreasonably high which is the reason you should aim to pay off your balance each month (so you won't have to pay this exorbitant interest rate). Also note that the interest rate on cash advances is usually MUCH higher than the interest on regular credit card charge transactions so avoid using your card to get cash (those pesky checks that they send). The statement will also list the interest rate on a per diem basis, that is, the amount of interest that you are charged per day. The product of all this information is your "periodic finance charge" which is the amount that has been tacked onto your current bill. You don't have to do any math - it's already figured for you on the statement. Also keep in mind that if you do not pay off your balance each month, you will eventually be paying interest on the interest during subsequent months. This makes the credit card companies very rich.
Hope this helps.

Answer 2

I pay the minimum payment, plus the amount of finance charges and increase that by at least $20- more if I can to bring my balances down. You can get a general idea by looking at 3-4 of your last statements and by looking at the balances and finance charges during that statement time. Mine usually go down by anywhere by $3-5 a month since I have been paying them down.