Monthly Periodic Rate Calculation
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Determine the APR on your credit card. You can find this information on your monthly statement or by calling your credit card's customer service department.
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Take your monthly rate and divide it by 12. For example, if your APR is 18% and you divide it by 12 months, you get a monthly periodic rate of 1.5%.
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Determine your monthly finance charge by multiplying your monthly periodic rate of 1.5% by your credit card balance. For example, if you have a balance of $100 and you multiply it by 1.5%, your finance charge would be $1.50.
Daily Periodic Rate Calculation
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Take your daily periodic rate and divide it by 365 days. For example, if your rate is 18%, divide this figure by 365 to get .05%.
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Determine your finance charge by multiplying your average daily balance by your daily periodic rate, and then multiply that figure by the amount of days in the cycle. For example, $100 x .05 (daily periodic rate found on the back of your statement) x 31 (days in the cycle) gives you a finance charge of $1.02.
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The final step in the process is double checking your calculations. This will ensure you make the right choice when comparing credit card APRs.
- Skill: Moderate
- Ingredients:
- Credit card statement
- Pen
- Paper
- Tip: Although you can usually find APR calculations on the back of your statement, if you have any questions contact your bank. They can explain calculations if you are confused.
- Warning:
- Read your statements closely. Sometimes a lender will change the way they calculate APRs. Make sure to read the annual disclosures that your financial institution sends to understand these changes.
