How this calculator works
This uses a simple-interest, 365-day-year convention: the annual rate is divided by 365 and applied to the balance. Interest does not compound here, so multiplying the daily figure by 30 or 365 gives the month and year figures shown. Many Canadian and US cards instead charge interest on an average daily balance at a daily rate that the agreement defines, and some agreements use a 360-day or 366-day denominator, so a statement figure can differ slightly. Actual/365 Fixed is a standard basis for simple-interest loans and judgments.
Formula
Daily rate d = r / 365, where r is the annual rate as a fraction. Interest per day = balance × d. Interest for 30 days = balance × d × 30. Interest for a year = balance × r. A leap day is still one day under this convention.
Worked example
A balance of $12,000 at 6.5% has a daily rate of 0.017808% and accrues $2.14 a day. Over 30 days that is $64.11, and over a full year $780.00. Doubling the balance doubles each figure; halving the rate halves them.
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Frequently asked questions
Why is a month taken as 30 days?
Thirty days is a convenient average. A real billing cycle ranges from 28 to 31 days, so use the actual cycle length if you need the statement figure.
Is this the same as daily compounding?
No. Simple interest adds nothing to the balance, so tomorrow's interest is charged on the same principal. Daily compounding charges interest on unpaid interest and grows slightly faster.
Does the balance change during the month?
This calculator assumes a fixed balance. If you make payments or new charges during the period, interest is charged on the changing daily balance, which is why statements quote an average daily balance.