The general formula to calculate the interest is as follows:
Credit card interest = (Number of days counted from the transaction date x outstanding amount x Interest rate per month x 12 months) / 365.
This rate represents the annual interest, not the monthly calculation. To calculate the interest for the monthly dues, banks usually apply the monthly percentage rate or MPR. The formula for MPR is:
APR/Number of billing cycles per year
For example, if the APR is around 24-36% per annum, then the interest rate per month usually comes around 2-3%.
Rather than making manual calculations, it is wise to use an online credit card interest calculator available on bank websites. With basic financial details, the tool will display how much the total interest charges would be for the month and the overall amount due.
