- Different transactions may carry different APRs.
- Daily balance calculations differ from monthly approximations.
- New spending changes the repayment path.
A card’s APR is a starting point for understanding interest, not the complete calculation. The balance subject to interest and the terms applied to each transaction are also important.
Read the balance categories
Purchases, cash advances, and balance transfers can have different rates or terms. A promotion may expire, and the card agreement determines how payments are allocated among balances.
A single APR typed into a calculator cannot capture several different balance categories at once. For a precise account calculation, the issuer’s documents and statement need to be read together.
What daily accrual means
Many card calculations use daily balances. Dates of purchases and payments can therefore affect the interest owed. A monthly-rate model smooths those dates into a single period and is an approximation.
Our payoff calculator multiplies the starting balance for a month by the entered nominal annual interest rate divided by twelve, then deducts the monthly payment. It assumes no fees or new purchases.
Understand a grace period
Whether interest applies to purchases can depend on the issuer’s grace-period conditions and whether required balances are paid in full by the relevant due date. Cash advances and other transactions may have different treatment.
Do not infer a universal grace period from a generic explanation. Read the actual terms that apply to the transaction and account.
Turn an APR into a useful question
Ask which balance it applies to, how the balance is measured, when a promotion ends, and how payments are allocated. Then use the simplified calculator to compare the direction of different payment scenarios, not to reproduce the statement exactly.