The Ultimate Guide to Credit Cards
Wednesday, January 27, 2021

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

How To Calculate Apr On A Credit Card

credit card advice

Ashley Dull
By: Ashley Dull
Updated: May 27, 2020
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 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.

3. View Your APR

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

(ADPR)(365) = APR

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.

U.S. Bank Visa® Platinum Card Review

at the issuer'ssecure website

0% BALANCE TRANSFER RATING

★★★★★
5.0

OVERALL RATING

4.6/5.0
  • For a limited time, get a special 0% introductory APR on purchases and balance transfers for 20 billing cycles.
  • Enjoy Cell Phone Protection Coverage when you pay your monthly cellular bill with your U.S. Bank Visa® Platinum Card.
  • View your credit score anytime, anywhere in the mobile app or online banking. It's easy to enroll, easy to use, and free to U.S. Bank customers.
  • Choose your payment due date
  • $0 Annual fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 20 billing cycles
0% for 20 billing cycles
13.99% - 23.99% Variable
$0
N/A

0% BALANCE TRANSFER RATING

★★★★★
4.9

OVERALL RATING

4.7/5.0
  • No Late Fees, No Penalty Rate, and No Annual Fee... Ever
  • 0% intro APR offers on both purchases and balance transfers (balance transfer fee applies)
  • Choose a payment due date that works best for you — beginning, middle, or end of the month
  • Stay protected against identity theft with Citi® Identity Theft Solutions
  • $0 liability on unauthorized charges
  • 24/7 access to customer service representatives - save time, just say "representative" when you call, to enjoy fast, personal help
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 18 months
0% for 18 months
14.74% - 24.74% Variable
$0
Excellent/Good

0% BALANCE TRANSFER RATING

★★★★★
4.9

OVERALL RATING

4.6/5.0
  • 0% Intro APR for 18 months on purchases and balance transfers (balance transfer fee applies)
  • Get free access to your FICO® score online
  • With Citi Entertainment®, get special access to purchase tickets to thousands of events, including presale tickets and exclusive experiences for the year's most anticipated concerts, sporting events, dining experiences, and more
  • Shop with confidence knowing that you have dependable protection benefits, including $0 Liability on Unauthorized Purchases and Citi® Identity Theft Solutions.
  • 24/7 access to customer service representatives
  • Enjoy the flexibility to choose the payment due date that works best for you - the beginning, middle or end of the month
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 18 months
0% for 18 months
14.74% - 24.74% Variable
$0
Excellent/Good

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. However, 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 percent 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 one of the most important factors used when determining your credit score.

Advertiser Disclosure

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