What is a Finance Charge?
A finance charge is the cost of borrowing on a revolving credit balance, such as a credit card, calculated based on your average daily balance during the billing cycle and the card’s annual percentage rate.
The Formula
Daily Periodic Rate = APR ÷ 365. Finance Charge = Average Daily Balance × Daily Periodic Rate × Number of Days in the Billing Cycle. This is the average-daily-balance method commonly used by credit card issuers.
Note: This tool is for general educational and planning purposes only; actual issuer methods and rounding may vary slightly.
Last reviewed August 2026