Confused by credit card interest? Here’s how to calculate it.

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Agubey

By : Virat

Find your credit card’s APR or annual percentage rate on your billing statement. 

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Divide the APR by 365 to get your card’s daily periodic rate. 

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Calculate the average daily balance in your account over the course of the billing period. 

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For example, let’s say you start out the month with an unpaid balance of $2,500.

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Then, in the middle of the month, you make a $600 payment, which brings your balance down to $1,900 for the rest of the month.

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To get the average daily balance, you first need to add up the balances for every day in the billing period.

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This will give you the sum of your daily balances.

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Now divide that sum by the number of days in the billing period to give you your average daily balance.

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Now let’s put it all together to calculate the interest.

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Take the average daily balance and multiply it by the daily periodic rate and the number of days in the billing period.

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That’ll give you the interest charge you can expect on your next bill.

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So what can you do to shrink that charge?

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Try lowering your average daily balance by making payments early, or more than once a month.

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Better yet, pay off your balance in full every month, and you won’t pay any interest at all.

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If that’s not possible, a low-interest credit card can help reduce your interest rate and save you money.

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Check out the full article  

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