The Ultimate Guide to Credit Cards
Monday, February 6, 2023

How to Calculate APR on a Credit Card

How To Calculate Apr On A Credit Card

credit card advice

Ashley Dull

Written by: Ashley Dull

Ashley Dull

With more than a decade of experience as a content manager and marketer, Ashley has specialized in finance coverage since 2015. She has worked closely with the world’s largest banks and financial institutions, up-and-coming fintech companies, and press and news outlets to curate comprehensive content and media campaigns. Her credit card commentary is featured on national media outlets that include CNBC, MarketWatch, Investopedia, and Reader's Digest, among others.

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Edited by: Lillian Guevara-Castro

Lillian Guevara-Castro

Lillian brings more than 30 years of editing and journalism experience. She has written and edited for major news organizations, including The Atlanta Journal-Constitution and the New York Times, and she previously served as an adjunct instructor at the University of Florida. Today, she edits all CardRates content for clarity, accuracy, and reader engagement.

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Advertiser Disclosure

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. But not to fear — learning how to calculate APR on a credit card is possible, and we’ll show you how.

As a responsible consumer, you’re 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 at 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 this calculation, we’ll assume it’s .04654.

2. Multiply ADPR By 365

Take the ADPR (.04654) and multiply it by 365, the number of days in a year. You use the number of days in a year because your interest compounds daily. Your ADPR represents what you are 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.

3. View Your APR

Round that number up to get 16.99% — your APR. The calculation is:

(ADPR)(365) = APR

Transfer the Balance and You Could Pay $0 Interest

If you’ve done the math and aren’t happy with what you see, there’s a way to stop paying interest 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 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.

Discover it® Balance Transfer Review

at Discover Card'ssecure website

0% BALANCE TRANSFER RATING

★★★★★
5.0

OVERALL RATING

  • INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. You could turn $150 cash back into $300.
  • Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, and gas stations, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases – automatically.
  • Discover helps remove your personal information from select people-search websites. Activate by mobile app for free.
  • Every $1 you earn in cash back is $1 you can redeem.
  • No annual fee.
  • Click "Apply Now" to see terms and conditions.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR for 6 months
0% Intro APR for 18 months
16.24% - 27.24% Variable APR
$0
Excellent/Good
BankAmericard® credit card Review

at Bank Of America'ssecure website

0% BALANCE TRANSFER RATING

★★★★★
4.9

OVERALL RATING

  • New longer intro period! 0% Introductory APR for 21 billing cycles for purchases, and for any balance transfers made in the first 60 days. After the intro APR offer ends, 16.24% - 26.24% Variable APR will apply. A 3% fee (min $10) applies to all balance transfers.
  • No annual fee.
  • No penalty APR. Paying late won't automatically raise your interest rate (APR). Other account pricing and terms apply.
  • Access your FICO® Score for free within Online Banking or your Mobile Banking app.
  • Contactless Cards - The security of a chip card, with the convenience of a tap.
  • This online only offer may not be available if you leave this page or if you visit a Bank of America financial center. You can take advantage of this offer when you apply now.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR for 21 billing cycles for purchases
0% Intro APR for 21 billing cycles for any balance transfers made in the first 60 days
16.24% - 26.24% Variable APR on purchases and balance transfers
$0
Excellent/Good

Additional Disclosure: Bank of America is a CardRates advertiser.

0% BALANCE TRANSFER RATING

★★★★★
4.9

OVERALL RATING

  • No Late Fees, No Penalty Rate, and No Annual Fee... Ever
  • 0% Intro APR for 21 months on balance transfers from date of first transfer and 0% Intro APR for 12 months on purchases from date of account opening. After that the variable APR will be 18.24% - 28.99%, based on your creditworthiness. Balance transfers must be completed within 4 months of account opening.
  • There is an introductory balance transfer fee of $5 or 3% of the amount of the transfer, whichever is greater for balances transfers completed within 4 months of account opening.
  • Stay protected with Citi® Quick Lock and $0 liability on unauthorized charges
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR Period 12 months on Purchases
0% Intro APR Period 21 months on Balance Transfers
18.24% - 28.99% (Variable)
$0
Excellent, Good Credit

Additional Disclosure: Citi is a CardRates advertiser.

Final Advice

By understanding your APR, you’ll be able to comprehend how interest is calculated and tacked on to your monthly bill. This should prompt you to pay your balance off every month because those interest fees can have a considerable impact on budgets. But if you carry a balance, hopefully by now you’ve decided you’re not going to settle for paying high interest (or any interest!) any longer and are ready to transfer that balance to a 0% intro APR card that will treat you better. Also, don’t forget how important it is to make your payments on time every month — having a history of on-time payments is the most important factor used when calculating your credit score.

Advertiser Disclosure

CardRates.com is a free online resource that offers valuable content and comparison services to users. To keep this resource 100% free, we receive compensation for referrals for many of the offers listed on the site. Along with key review factors, this compensation may impact how and where products appear across CardRates.com (including, for example, the order in which they appear). CardRates.com does not include the entire universe of available offers. Editorial opinions expressed on the site are strictly our own and are not provided, endorsed, or approved by advertisers.