How to Calculate Interest with APR

With anything containing numbers, there is a usually a formula to solve it. Here are the steps to calculate the amount of interest you have to pay on your outstanding balance. 

Steps

1. Take your APR and divide it by 365 (numbers of days in a year) to get a daily periodic rate (DPR)
2. The DPR is then multiplied by the amount of days the outstanding balance have incurred 
3. That amount is then multiplied by the amount of outstanding balance you owe
4. The result is the amount of interest that is additional to your outstanding balance

Graphical Steps

Source: Bank of America

Example calculation
Purchase APR: 20% = 0.20
Outstanding balance: $10,000
Days incurred: 1 day