Capital Oneinterestcharges are calculated by dividing 19.99% (V) - 29.99% (V) (depending on the card) by 365. The resulting rate is approximately what Capital One applies to an unpaid credit card balance every day until it is paid in full. However, the math gets a little bit complicated.
How Capital One interest charges are calculated:
- Capital One adds up each day’s balance and divides the total by the number of days in the billing period.
- Capital One also sets a daily periodic rate, which is the Annual Percentage Rate (APR) divided by 365.
- To calculate the interest, Capital One multiplies the average daily balance and the daily periodic rate. Then it multiplies the result of that by the number of days in the billing period. If there’s a $0 or negative balance from the previous billing period, however, this does not apply.
Keep in mind that the APR is generally what you’d pay in interest over an entire year. But withcompound interest, you’ll end up paying more. That’s because the interest charged one day becomes part of the balance accruing interest the next. However, this only occurs if you start a new billing period with an existing balance.
How to avoid paying interest:
Of course, you canavoid interest chargesaltogether if you pay your full statement balance within thegrace periodevery month. Capital One gives you 25 days until the due date to pay the entire balance with no interest. Any unpaid balance will incur daily interest charges and will cancel the grace period. You can have the grace period reinstated after you’ve paid the entire balance for two straight billing cycles.
This answer was last updated on 01/15/24 and it was first published on 03/24/21. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
