Understanding Credit Card Interest and How This Calculator Works
Credit card interest can significantly increase the total cost of your purchases if you don't pay off your balance in full each month. This calculator helps you estimate how much interest you might pay and how long it could take to pay off your debt under different payment scenarios.
How Credit Card Interest is Calculated
Credit card companies typically calculate interest daily using the Average Daily Balance method. Here's a simplified breakdown of what the calculator models:
Daily Periodic Rate: The Annual Percentage Rate (APR) is divided by the number of days in the billing cycle (usually 365 or 366).
Daily Rate = APR / 365
Average Daily Balance: This is calculated by summing up the balance of your account for each day of the billing cycle and then dividing by the number of days in the cycle. For simplicity in this calculator, we use the current balance as a starting point and assume it remains constant until the first payment is made.
Daily Interest Charge: The Average Daily Balance is multiplied by the Daily Periodic Rate.
Daily Interest = Average Daily Balance * Daily Periodic Rate
Monthly Interest Charge: The Daily Interest Charge is multiplied by the number of days in the billing cycle.
Monthly Interest = Daily Interest * Days in Cycle
This calculator estimates the total interest paid over time and the time to pay off the debt by iteratively subtracting payments and adding accrued interest, considering your specified payment frequency.
Why Use This Calculator?
Debt Payoff Estimation: Understand how long it will take to become debt-free if you only make minimum payments (or a fixed amount).
Impact of Payment Amount: See how increasing your monthly payment can drastically reduce the time to pay off your debt and the total interest you pay.
Comparison of Payment Frequencies: For certain payment schedules (like bi-weekly or weekly), you might end up making an "extra" payment per year compared to monthly payments, potentially speeding up payoff.
Financial Planning: Use the results to budget more effectively and strategize on how to tackle credit card debt.
Important Considerations:
This calculator provides an estimate. Actual interest charges may vary slightly due to daily balance fluctuations, exact days in billing cycles, and how the credit card issuer calculates the average daily balance.
Fees (like late fees or annual fees) are not included.
Promotional APRs (like 0% introductory offers) are not accounted for.
This calculator assumes your payment is applied directly to the balance and interest first.
function calculateInterest() {
var balance = parseFloat(document.getElementById("balance").value);
var apr = parseFloat(document.getElementById("apr").value);
var monthlyPaymentInput = parseFloat(document.getElementById("monthlyPayment").value);
var paymentFrequency = document.getElementById("paymentFrequency").value;
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = "; // Clear previous results
if (isNaN(balance) || isNaN(apr) || isNaN(monthlyPaymentInput) || balance < 0 || apr < 0 || monthlyPaymentInput <= 0) {
resultDiv.innerHTML = 'Please enter valid positive numbers for all fields, with a monthly payment greater than zero.';
return;
}
var dailyRate = apr / 100 / 365;
var totalInterestPaid = 0;
var months = 0;
var years = 0;
var daysInCycle = 30; // Average days in a month for estimation
var currentBalance = balance;
var paymentAmount = 0;
// Determine payment amount based on frequency
switch (paymentFrequency) {
case 'monthly':
paymentAmount = monthlyPaymentInput;
break;
case 'bi-weekly':
paymentAmount = monthlyPaymentInput / 2; // Assume input is monthly equivalent for comparison
break;
case 'weekly':
paymentAmount = monthlyPaymentInput / 4; // Assume input is monthly equivalent for comparison
break;
}
// Ensure payment is at least the interest accrued
var interestThisMonth = currentBalance * dailyRate * daysInCycle;
if (paymentAmount < interestThisMonth) {
resultDiv.innerHTML = 'Your payment is less than the monthly interest. Debt will grow indefinitely. Please increase your payment.';
return;
}
var paymentsMade = 0;
while (currentBalance > 0.01) { // Continue as long as there's a balance
// Calculate interest for the current period
var interestForPeriod = currentBalance * dailyRate * daysInCycle;
totalInterestPaid += interestForPeriod;
// Determine how much of the payment goes to principal vs. interest
var principalPayment = paymentAmount;
// Handle the case where the payment might exceed the remaining balance + interest
var effectivePayment = Math.min(paymentAmount, currentBalance + interestForPeriod);
principalPayment = effectivePayment – interestForPeriod;
currentBalance -= principalPayment;
if (currentBalance 5000) {
resultDiv.innerHTML = 'Calculation exceeded maximum iterations. The debt may not be payable with the current payment amount.';
return;
}
}
var totalMonths = Math.round(months);
years = Math.floor(totalMonths / 12);
var remainingMonths = totalMonths % 12;
var timeToPayoff = "";
if (years > 0) {
timeToPayoff += years + " year" + (years > 1 ? "s" : "");
if (remainingMonths > 0) {
timeToPayoff += ", ";
}
}
if (remainingMonths > 0) {
timeToPayoff += remainingMonths + " month" + (remainingMonths > 1 ? "s" : "");
}
if (timeToPayoff === "") timeToPayoff = "Less than a month";
resultDiv.innerHTML = `
Estimated Total Interest Paid: $${totalInterestPaid.toFixed(2)}
Estimated Time to Pay Off: ${timeToPayoff}
`;
}