How business credit card interest is calculated
Most business credit cards use the average daily balance method to compute the monthly interest charge:
Monthly interest = Balance × (APR ÷ 365) × days in billing cycle
This calculator uses a 30-day billing cycle throughout, which is standard for estimation purposes. Your actual statement may vary slightly if your cycle is 28–31 days.
When does a payment actually reduce the balance?
If your monthly payment is equal to or less than the monthly interest charge, the principal never decreases — you will carry the balance indefinitely. To pay off the card, your payment must exceed that month's interest. The "minimum viable payment" shown is the first-month interest charge plus $1, which is the floor at which any principal reduction occurs.
In practice, credit card issuers set a minimum payment of roughly 1–2% of the balance or $25–$35, whichever is greater. Paying only the issuer minimum extends payoff by years and roughly triples total interest cost compared to a fixed higher payment.
Business vs. personal credit cards
| Feature | Business card | Personal card |
|---|---|---|
| CARD Act protections | Not required (many issuers apply voluntarily) | Required by law |
| Credit reporting | Often reported only to business bureaus (D&B, Equifax Business) | Reported to personal bureaus |
| Interest deductibility | Generally deductible as business expense (consult your CPA) | Not deductible for personal use |
| Typical APR range (2025) | 18–30% | 17–29% |
Source: Federal Reserve G.19 release (2025). Business card rates track the prime rate plus a risk spread; rates reset when the Fed changes the benchmark.
Worked example
You carry a $8,500 balance on a business Visa at 22.99% APR. You plan to pay $350/month.
- First-month interest: $8,500 × (0.2299 ÷ 365) × 30 ≈ $160.64
- Principal reduced in month 1: $350 − $160.64 = $189.36
- Months to payoff: ~30 months (2.5 years)
- Total interest: ~$1,985
- Raising the payment to $500/month cuts payoff to ~19 months and total interest to ~$1,220
What this calculator does not cover
- Variable APR changes. Business card APRs float with the prime rate. Re-run when the rate resets.
- Fees. Annual fees, late fees, balance transfer fees, and foreign transaction fees are not included — add them to your total cost of carry.
- 0% introductory periods. If your card has a 0% promotional APR, enter the post-promo rate and the remaining balance at the end of the promo period.
- Multiple cards. For multi-card debt reduction strategies (avalanche vs. snowball), run each card separately and compare total interest.
Sources
- CFPB — "How do I calculate the interest charged on my credit card?" (accessed 2026-10-20)
- Federal Reserve — "Consumer Credit — G.19" (accessed 2026-10-20)