Finance Charge Calculator
From the carried balance, APR and billing-cycle days, compute one cycle's finance charge (interest) and the next opening balance.
Input Data
Results
At a glance:The Finance Charge Calculator estimates one cycle's borrowing cost on a credit card or revolving credit (mainly interest). Daily rate = APR ÷ 100 ÷ 365; daily finance charge = carried balance × daily rate; finance charge = daily charge × billing-cycle days; next opening balance = carried balance + finance charge. To cut it, pay in full before the due date and use the grace period; never pay only the minimum (interest compounds). Cash advances usually have no grace period and accrue interest from day one plus a fee. Actual methods (average-daily-balance) and fees follow the issuer.
Formula
Daily rate = APR ÷ 100 ÷ 365.
Daily finance charge = carried balance × daily rate.
Finance charge = daily finance charge × billing-cycle days.
Next opening balance = carried balance + finance charge.
$$DailyRate = \\dfrac{APR}{100 \\times 365}$$$$FinanceCharge = Balance \\times DailyRate \\times Days$$How to Use
- Enter the carried (unpaid) balance.
- Enter the APR of the card/loan.
- Enter the billing-cycle days (commonly 30) to see the interest and new balance.
Finance charge (interest) at balance and APR over a 30-day cycle
| Carried balance (HK$) | APR | Daily charge (HK$) | 30-day charge (HK$) |
|---|---|---|---|
| 1,000 | 18% | 0.49 | 14.79 |
| 5,000 | 24% | 3.29 | 98.63 |
| 10,000 | 30% | 8.22 | 246.58 |
Card APRs often run 18%–36%. At HK$10,000 and 30% APR, monthly interest alone is ~HK$247, over HK$3,000 a year. Paying only the minimum lets balance and interest snowball — the classic credit-card trap.
Case Studies
Case 1: One cycle's interest
Ming's card: carried balance HK$1,000, APR 18%, cycle 30 days.
Daily rate = 18% ÷ 365 ≈ 0.0493%; daily charge = 1,000 × 0.0493% ≈ HK$0.49; finance charge = 0.49 × 30 ≈ HK$14.79.
Next opening balance = 1,000 + 14.79 = HK$1,014.79. If still unpaid, interest accrues on this new balance — compounding.
Case 2: The minimum-only 'credit-card trap'
Shan: balance HK$10,000, APR 30%. If unpaid a month: finance charge ≈ 10,000 × (30%/365) × 30 ≈ HK$246.58, over HK$3,000 a year — about 30% of the balance.
Paying only the minimum leaves most of the payment eaten by interest, principal barely falls, and the balance drags for years with total interest possibly far exceeding the original spend — the credit-card trap.
Notes: pay in full within the grace period; avoid cash advances (no grace, fee); if burdened by high-interest card debt, consider a balance transfer to a lower-rate plan or a cheaper loan to consolidate. Pair with the credit-card-payoff and balance-transfer calculators. Educational estimate only; actual methods follow the issuer.
FAQ
Is the finance charge just interest?
Interest is the most common part, but the finance charge may also include late fees and other credit charges. This calculator estimates the interest portion.
How do I reduce the finance charge?
Pay the balance in full before the due date to use the grace period; avoid paying only the minimum and avoid cash advances (usually no grace period, interest from day one).
Why may the actual bill differ from this?
Issuers may use average-daily-balance or other methods, and the balance fluctuates daily. This tool uses a simplified formula; actual amounts follow the issuer's terms and statement.
What is the grace period, how to keep it, how to lose it?
The grace period is the most valuable yet misunderstood credit-card feature. It is the span from the statement date to the payment due date (typically ~20–25 days); if you pay the previous statement balance in full within it, new purchases are not charged interest. With the time from purchase to statement closing, a purchase can enjoy up to ~50+ interest-free days. To keep it: pay the full statement balance every cycle before the due date — then you stay interest-free and keep the benefit. To lose it: fail to pay in full (even a little, or only the minimum) and interest starts on the unpaid balance; worse, many issuers then charge interest on new purchases from the posting date too — the whole grace period lapses until you clear the balance and resume full payment; some even back-charge the original statement amount. Cash advances usually have no grace period at all (interest from day one, plus a fee) — avoid them. Practical: set auto full-payment; if you truly cannot pay in full one month, pay as much as possible and know you will be charged and new purchases may lose grace; never treat the minimum as 'all I need this month' — it only avoids late fees, interest still accrues heavily.
APR vs monthly rate vs EAR — which shows the real cost?
APR (annual percentage rate) is the nominal annual rate, ignoring compounding — this calculator uses APR ÷ 365 for the daily rate. Monthly rate (e.g. 2%/month) must not be simply ×12 to get the real cost, as that ignores compounding. EAR (effective annual rate, also APY) is the true annual cost after compounding — if unpaid interest rolls into principal and accrues again (compound), EAR exceeds the nominal APR. Example: nominal APR 18% compounded daily gives EAR ≈ 19.7%; the higher the APR and the more frequent the compounding, the wider the gap. So: if you pay in full each cycle (grace period), real cost is zero regardless of APR; if you revolve a balance, judge the true annual burden by EAR, not nominal APR; compare credit products by converting to the same basis (EAR or all-in cost). This calculator gives a single-cycle direct estimate; for long-term revolving cost, remember compounding pushes the real cost above nominal APR. Pair with the effective-interest-rate calculator. Educational estimate only.
Related Tools
References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.