Simplified educational model
Translate an average balance and APR into a one-month estimate while keeping the formula and its limitations visible.
Browser-local estimate
This simplified estimate uses APR ÷ 12. It does not reproduce every issuer's daily balance method.
Monthly rate used: . Actual interest can differ because of daily balances, cycle length, transactions, fees, and compounding.
Formula
The tool converts the APR to an annual decimal rate, divides it by 12, and applies that monthly rate to the entered balance.
Issuers commonly use daily periodic rates and daily balances. Cycle length, posting dates, new transactions, fees, grace periods, and compounding can change actual interest.
A $5,000 average balance at 24% APR uses a simplified monthly rate of 2%, producing an estimated $100 for one month.
Use it to understand scale and compare scenarios—not to replace the interest charge printed on a statement or the method described in an agreement.
For general consumer guidance, see the Consumer Financial Protection Bureau explanation of credit card interest calculations.