Credit Card Interest Calculator
Credit Card Interest Calculator
How card interest is really charged: nothing if you pay the full bill by the due date, and interest from the day of purchase — plus GST — if you do not.
Card interest on a purchase
A $20,000 purchase at 3.75% a month, 40 days to the due date, $5,000 paid then, the rest 30 days later, 18% GST
Card interest when the bill is not paid in full
Total = interest × (1 + GST)
- P
- the purchase
- D
- days from the purchase to the due date
- A
- the amount paid on the due date
- T
- days from the purchase until the rest is paid. Nothing is charged if the full bill is paid by the due date.
Worked example
A $20,000 purchase at 3.75% a month, 40 days to the due date, $5,000 paid then, the rest 30 days later, 18% GST
Daily rate = 3.75 × 12 ÷ 365 = 0.1233%
20,000 × 40 days = 8,00,000; 15,000 × 30 days = 4,50,000
Interest = 0.1233% × 12,50,000 = $1,541.10
GST = 18% × 1,541.10 = $277.40; total $1,818.49
Paying the full 20,000 by the due date would have cost nothing
The same 20,000 purchase: what paying part on the due date saves
| Paid on the due date | Interest | GST | Total |
|---|---|---|---|
| $0 | $1,726.03 | $310.68 | $2,036.71 |
| $5,000 | $1,541.10 | $277.40 | $1,818.49 |
| $10,000 | $1,356.16 | $244.11 | $1,600.27 |
| $19,000 | $1,023.29 | $184.19 | $1,207.48 |
How credit card interest is charged
A card gives an interest-free period on purchases: from the day you buy to the payment due date, commonly 20 to 50 days depending on where in the billing cycle you buy. It applies only if you pay the whole bill by the due date. RBI’s credit card directions require every issuer to state plainly in its Most Important Terms and Conditions that the interest-free period is suspended if any part of the previous bill is still outstanding.
If you pay less than the full bill, even the minimum amount due, the interest-free period is lost and interest is charged from the date of each transaction, not from the due date. Issuers quote a monthly rate — 3.75% a month, or 45% a year, is common in India — and charge it daily on the balance, at the monthly rate × 12 ÷ 365. That is how the issuers’ own examples work: SBI Card’s shows a 6,000 purchase costing 281.10 for 38 days, and Federal Bank’s 10,000 costing 369.86 for 30 days. GST at 18% is then added, because card interest is excluded from the GST exemption for loan interest.
That makes a partial payment expensive. In the table, paying all but $1,000 of the $20,000 bill still costs $1,207.48, because the whole 20,000 carried interest from the day of purchase to the due date. And until the balance is cleared, new purchases lose their interest-free period too. As an annual rate, 3.75% a month is 45% as quoted, 55.5% with monthly compounding, and 53.1% as quoted once GST is added.
If you cannot clear a balance, work out a plan with the credit card payoff calculator, see what paying only the minimum does with the credit card minimum payment calculator, or compare converting it with the credit card EMI conversion calculator or moving it with the balance transfer calculator. Pay the full amount by the due date whenever you can. This is arithmetic on the figures you enter, not financial advice.
Frequently asked questions
How is credit card interest calculated?
Daily, from the date of each transaction, once you pay less than the full bill: balance × monthly rate × 12 ÷ 365 × days, plus 18% GST in India. The example costs $1,818.49.
If I pay the minimum amount due, is there still interest?
Yes. Paying the minimum only avoids the late payment charge. Interest is charged on the whole purchase from the transaction date, and on what is left until it is paid.
Is 3.75% a month the same as 45% a year?
45% is how cards quote it: 3.75 × 12. With monthly compounding it is 55.5% a year, and GST on the interest makes the quoted figure 53.1%.
When is there no interest on a credit card?
When you pay the full bill by the due date and had no unpaid balance from the previous bill. Cash withdrawals usually carry interest from the day taken regardless.
Related calculators
References
- Reserve Bank of India. Master Direction – Credit Card and Debit Card – Issuance and Conduct Directions, 2022. RBI/2022-23/92, DoR.AUT.REC.No.27/24.01.041/2022-23, 21 April 2022 (as amended). Para 9(b): issuers must quote APRs for retail purchases, balance transfer and cash advances; no negative amortisation; unpaid charges, levies and taxes not capitalised; the MITC must explain that the interest-free credit period is suspended if any balance of the previous month’s bill is outstanding.
- SBI Card. Most Important Terms and Conditions — Personal Credit Cards (consulted 22 September 2026): finance charges 3.75% a month (45% a year) on unsecured cards; interest-free period of 20 to 50 days on retail purchases only when the previous balance is paid in full; otherwise interest is charged from the date of transaction until paid (its example: a 6,000 purchase for 38 days at 3.75% a month = 281.10); balance transfer at 0% for 60 days or 1.7% a month for 180 days with a one-time processing fee, while new purchases carry the standard rate; finance charges subject to applicable taxes.
- Federal Bank. Credit Cards — Most Important Terms and Conditions (consulted 22 September 2026; rates revised from 10 January 2026): 45.00% a year (3.75% a month) for most customers, lower tiers for large account balances; when the bill is not paid in full, a finance charge by the average daily balance method on all transactions from the date of transaction; interest-free period up to 48 days; GST on interest (its example: 10,000 for 30 days = 369.86). Each issuer sets its own rates.
- Government of India, Ministry of Finance. Notification No. 12/2017-Central Tax (Rate), 28 June 2017, entry 27(a): interest on loans is exempt “other than interest involved in credit card services”, so card interest bears GST, charged by issuers at 18% (Central Tax 9% + State Tax 9%, or Integrated Tax 18%), on interest and fees. Rate unchanged by the September 2025 GST rationalisation.