How to Calculate APR on a Credit Card (Dec. 2023)

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.

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

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.

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.

Citi® Diamond Preferred® Card

at Citi'ssecure website

0% BALANCE TRANSFER RATING

★★★★★

4.8

OVERALL RATING

4.5/5.0

Our Review »

• 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 a balance transfer fee of either $5 or 5% of the amount of each transfer, whichever is greater
• Get free access to your FICO® Score online.
• With Citi Entertainment®, get special access to purchase tickets to thousands of events, including concerts, sporting events, dining experiences and more.
• No Annual Fee - our low intro rates and all the benefits don’t come with a yearly charge.

• See application, terms and details.

See Rates & Fees

Intro (Purchases)	Intro (Transfers)	Regular APR	Annual Fee	Credit Needed
0% 12 months on Purchases	0% 21 months on Balance Transfers	18.24% - 28.99% (Variable)	$0	Excellent, Good

Additional Disclosure: Citi is a CardRates advertiser.

Citi Simplicity® Card

at Citi'ssecure website

0% BALANCE TRANSFER RATING

★★★★★

4.8

OVERALL RATING

4.5/5.0

Our Review »

• 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 19.24% - 29.99%, 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

• See application, terms and details.

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	19.24% - 29.99% (Variable)	$0	Excellent, Good Credit

Additional Disclosure: Citi is a CardRates advertiser.

Discover it® Balance Transfer

at Discover Card'ssecure website

0% BALANCE TRANSFER RATING

★★★★★

4.8

OVERALL RATING

4.9/5.0

Our Review »

• 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 you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases—automatically.
• Discover could help you reduce exposure of your personal information online by helping you remove it from select people-search sites that could sell your data. It’s free, activate with the mobile app.
• Every $1 you earn in cash back is $1 you can redeem
• No annual fee.
• Terms and conditions apply.

• See application, terms and details.

See Rates & Fees

Intro (Purchases)	Intro (Transfers)	Regular APR	Annual Fee	Credit Needed
0% Intro APR for 6 months	0% Intro APR for 18 months	17.24% - 28.24% Variable APR	$0	Excellent/Good

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.