A worked example
An average daily balance of $3,000 at 22% APR over a 30-day cycle generates about $54.25 in interest — $3,000 × (22% ÷ 365) × 30 days.
Frequently asked questions
Why 'average daily balance' instead of just the statement balance?
Your balance changes throughout the month as you spend and pay — issuers track the balance each day and average it, so a balance you paid down mid-month results in less interest than one that sat high the whole cycle.
How do I find my actual average daily balance?
It's usually shown directly on your statement under the interest charge calculation section. If not, it can be estimated by averaging your balance across each day of the billing cycle.
Why is APR divided by 365 instead of 12?
Because interest accrues daily, not monthly — issuers convert the annual rate into a daily periodic rate first, then apply it to each day's balance over the whole cycle.
This calculator provides estimates for general informational purposes only and is not financial advice. Issuer methods can vary slightly — check your card agreement for the exact calculation used.