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-PamelaDavis

To get the monthly interest charge, the first step is to divide the number of days in the billing cycle – which should be around 30 but can vary depending on what month it is and when the bank does its paperwork for your account – by 365. Then multiply that by the 11 percent annual interest rate. Finally, multiply that result by the average daily balance on your card during the billing cycle.

Let’s say that you had an average daily balance of $2,500 during the last billing cycle and that there were 32 days in the cycle. Divide that by 365 and you get 0.08767. Multiply that by 11 percent, or 0.11, and you get 0.0096438. The last step is to multiply that figure by $2,500. The grand total – your monthly interest charge – is $24.11.

That’s one way to compute the monthly charge. There’s a simpler method for arriving at the figure: Banks usually include the monthly interest charge and the running total for the calendar year on your statement.

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