Credit Card Interest Calculator

Credit cards in India give an interest-free period of roughly 20 to 50 days on purchases, but only if you pay the full statement balance by the due date. If you pay less, the bank charges a finance charge on the unpaid amount and usually on new purchases too. This calculator shows how much carrying a balance costs, using the average daily balance method and including 18% GST on the interest.

How to use this calculator

1. Enter your outstanding balance and any payments or purchases during the billing cycle, with their dates.
2. Enter the card's monthly interest rate, typically 3.5% to 3.75%. It is printed on your statement and in the card's most important terms and conditions.
3. Read the average daily balance, the interest, the GST on interest and the total finance charge.

Formula

Average daily balance (ADB) = sum of each day's closing balance ÷ days in the cycle
Interest = ADB × m
GST on interest = Interest × 18%
Total finance charge = Interest × 1.18

• ADB = average daily balance over the billing cycle
• m = monthly interest rate ÷ 100 (3.6% = 0.036)
• 18% = GST on financial services

Banks typically calculate interest daily at the annual rate ÷ 365. For a cycle of about 30 days, ADB × m gives nearly the same figure.

Worked example

Your statement shows ₹50,000 due. You do not pay it by the due date. On day 15 of the next cycle you pay ₹20,000. The card charges 3.6% a month.

• Days 1–15 balance: ₹50,000
• Days 16–30 balance: ₹30,000
• ADB = (50,000 × 15 + 30,000 × 15) ÷ 30 = ₹40,000
• Interest = 40,000 × 0.036 = ₹1,440
• GST = 1,440 × 0.18 = ₹259.20
• Total finance charge ≈ ₹1,699

If you had paid the full ₹50,000 by the due date, the finance charge would have been nil.

Now consider carrying ₹40,000 for a year with no payments. At 3.6% plus GST, the effective monthly cost is about 4.25%. Compounded for 12 months, the balance grows to roughly ₹65,900, before any late fees. That is close to a 65% annual cost.

Things to keep in mind

• Loss of interest-free period. Once you carry a balance, most banks charge interest on new purchases from the date of purchase until the full outstanding amount is cleared.
• Minimum amount due. Paying the minimum, usually around 5% of the outstanding balance, only avoids a late fee. Interest still applies to the full unpaid amount.
• Late payment fees. Missing even the minimum attracts a late fee, which also carries 18% GST, and can hurt your credit score.
• Cash withdrawals. Cash advances attract interest from the day of withdrawal plus a cash advance fee, with no interest-free period.
• Rates differ. Some premium or secured cards charge less. Check your own card's terms.
• Cheaper alternatives. A balance-conversion EMI or a personal loan usually costs far less than revolving credit, though processing fees apply.

This calculator is an estimate. Your card statement shows the actual charges.