# How to Convert APR to a Daily Interest Rate

The annual percentage rate (APR) is an interest rate charged on an outstanding credit card or loan balance. This interest or finance charge is the price for borrowing money from a lender. Higher APR leads to larger amount of finance charges. Credit card companies typically assess finance charges daily. Calculate daily interest rate to estimate an interest amount that will be charged to your credit card account.

## Step 2

Divide the APR values by 12 to calculate monthly percentage rates. For example, if APR for purchases and cash advances is 16.49 and 19.99 percent, then the corresponding monthly rates would be 16.49 / 12 or 1.37 percent and 19.99 / 12, or 1.67 percent.

## Step 3

Divide the APR values by 365 to calculate daily interest rates. In our example, the daily interest rates are 16.49 / 365, or 0.045 percent, and 19.99 / 365, or 0.055 percent.

## Step 4

Multiply the average daily balance by the daily interest rate to compute the interest assessed daily to your account. For example, if your purchase average daily balance is \$4,106.56, then the interest is \$4,106.56 x 0.045 /100 = \$1.86.

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