# How to Calculate APR on a Credit Card — 3 Easy Steps

Posted: May 24, 2018
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Banks are notorious for making numbers complicated. Even something as seemingly simple as your credit card’s annual percentage rate (APR) becomes complex when trying to calculate how banks get that number.

And you being a responsible consumer are rightfully concerned as to how this perplexing number determines what you’re paying in interest charges. We’ve broken it all down for you as simply as possible and will show you:

1. Three simple steps for calculating your APR
2. How to pay no interest at all with a balance transfer
3. The best balance transfer cards available today

We’ll take you through step by step and explain the hows and whys of each. Let’s get started with calculating your APR.

## 3 Steps to Calculate Your APR

It’s actually quite easy once you know the equation, which we’ll explain here.

### 1. Find Your Average Daily Periodic Rate

Your Average Daily Periodic Rate can be found on the bottom of your monthly statement. We’ll call it ADPR. This number will be very low and may not seem like much, but this is what you are being charged in interest on average daily. We’ll touch more on this in step 2, but for the purpose of this calculation, we’ll assume it’s .04654.

### 2. Multiply ADPR By 365

Take the ADPR (.04654) and multiply it by 365, which represents days in a year. You use the number of days in a year because you don’t actually get charged an APR once a year, but rather your interest compounds daily. Your ADPR represents what you’re being charged each day and is determined by your outstanding balance. Banks use the average balance over the entire billing cycle.

(.04654)(365) = 16.987

Note: Some credit card issuers use 360 instead of 365, according to the CFPB.

Round that number up and voila! 16.99% is your APR. To reiterate, the calculation is:

See, wasn’t that easy?

## Transfer the Balance and You Could Pay \$0 Interest

If you’ve done the math and are now displeased with what you’re seeing, there’s a way for you to stop paying interest altogether for a while. It’s called a 0-percent intro APR, and some cards offer them for up to 18 months.

This works by applying for a new card and transferring your current balance to the new card. You’ll receive up to 18 months of an interest-free balance AND most of the cards even offer 0 percent interest on purchases. This means everything charged to the new card will also be interest free for a while, depending on your agreement.

## The Best Balance Transfer Credit Cards Available

Our experts are always looking for the best balance transfer cards, as they’re such a popular option among consumers today who are sick of paying sky-high interest rates. Granted, many factors determine the interest you’re being charged, but if you have good credit, you’ll likely qualify for one of these cards.

Below are a few of our experts’ top picks, but to see the full list, visit our balance transfer review page.

1

### Discover it® Balance Transfer

at Discover Card'ssecure website

★★★★★

#### OVERALL RATING

4.9/5.0
• INTRO OFFER: Discover will match ALL the cash back earned at the end of your first year, automatically.
• Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate. Plus, earn unlimited 1% cash back on all other purchases – automatically.
• Redeem cash back any amount, any time. Rewards never expire.
• 100% U.S. based customer service.
• Get your free Credit Scorecard with your FICO® Credit Score, number of recent inquiries and more.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 6 months
0% for 18 months
13.49% - 24.49% Variable
\$0
Good/Excellent
2

### Wells Fargo Platinum Visa® Card

at Wells Fargo'ssecure website

★★★★★

#### OVERALL RATING

4.6/5.0
• 0% Intro APR for 18 months on purchases and balance transfers, then a 16.65%-26.49% variable APR; balance transfer fees apply
• Get up to \$600 protection on your cell phone (subject to \$25 deductible) against covered damage or theft when you pay your monthly cellular telephone bill with your Wells Fargo Platinum Visa® Card
• Zero Liability protection for promptly reported unauthorized transactions
• Convenient tools to help create a budget and manage your spending with My Money Map
• \$0 Annual Fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 18 months
0% for 18 months
16.65%-26.49% (Variable)
\$0
Excellent/Good
3

### Chase Freedom Unlimited®

★★★★★

#### OVERALL RATING

5.0/5.0
• Unlimited 1.5% cash back on every purchase — it's automatic
• Earn a \$150 Bonus after you spend \$500 on purchases in your first 3 months from account opening
• 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 16.49-25.24%. Balance transfer fee is 5% of the amount transferred, \$5 minimum
• No minimum to redeem for cash back
• Cash Back rewards do not expire as long as your account is open
• Free credit score, updated weekly with Credit Journey℠
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR on Purchases for 15 months
0% Intro APR on Balance Transfers for 15 months
16.49% - 25.24% Variable
\$0
Excellent/Good