Cost of Credit Calculator

Interest is only part of what credit costs

When a lender quotes a rate, the quote usually answers a narrower question than the one you are asking. The interest rate says what the borrowed money charges per year. It says nothing about the origination fee deducted before the money arrives, the monthly service fee, the annual fee on a card, or how the term stretches the bill. The cost of credit is all of it added together, expressed against the amount you received.

Take a $10,000 personal loan at 12% APR over 60 months with a 3% origination fee. The payment is $222.44 a month, and 60 of those payments come to $13,346.67, so the interest alone is $3,346.67. The fee takes another $300, bringing the all in cost of credit to $3,646.67, which is $36.47 for every $100 borrowed. The cash that reached your account was $9,700, not $10,000, and you are paying interest on the full $10,000 anyway.

That gap between the quoted rate and the real cost is the whole reason to run the numbers before signing. Two offers with the same APR can differ by hundreds of dollars once fees enter, and a lower rate with a fat fee can cost more than a higher rate with none. The calculator above takes the amount, rate, term and fees and returns the payment, the total cost and the effective APR, which is the single number that lets you compare offers on equal footing.

How the calculator works

The steps are standard amortization, and each one can be checked by hand.

• Monthly payment. For principal A, monthly rate r (APR divided by 12) and n months: payment = A x r / (1 - (1 + r)^-n). For $10,000 at 12% over 60 months, r is 1% and the payment is $222.44.
• Total interest. Payment x n minus the amount borrowed: 60 x $222.44 - $10,000 = $3,346.67.
• Fees. The origination fee is a percentage of the amount, here 3% x $10,000 = $300, plus any monthly fee times the number of months.
• Cost per $100 borrowed. Total interest plus fees, divided by the amount, times 100: $3,646.67 / $10,000 x 100 = $36.47.
• Effective APR. The annual rate that makes the stream of payments, fees included, worth exactly the cash you received. The calculator solves it by trial: it finds the rate where the present value of the payments equals the amount minus the upfront fee.

In the example, payments of $222.44 for 60 months discounted at 13.35% a year are worth exactly $9,700, the cash that arrived. That is why the effective APR is higher than the quoted 12%: the fee cut what you received while the payment stayed the same. Note that credit cards compound daily on carried balances, so a card APR behaves slightly worse than a loan APR of the same size; the calculator models the installment loan case.

What $10,000 costs at different rates and terms

The table below holds the amount at $10,000 with no fees and shows how the rate and the term each move the total. The cost per $100 column is the easiest way to compare offers of different lengths.

Read the two directions of the table. Moving down a row costs more, because the rate is higher. Moving from 36 to 60 months at the same rate also costs more, by $1,389.52 at 12%: a longer term lowers the payment but raises the total, because you rent the money for two more years. At 29.99% over 60 months, interest comes to $9,408.35, nearly the size of the original loan. The 24.99% row is not a straw man; it sits close to where store and subprime card rates land.

The same loan with fees of 1, 3 and 5 percent

Why the advertised APR is not always the rate you pay

Three mechanisms quietly push the effective cost above the number on the advertisement.

• Fees that the headline rate omits. For closed end loans, Regulation Z requires the disclosed APR to fold in most finance charges, but advertisements often quote the bare interest rate, and credit card APRs exclude the annual fee entirely. A card with a 22% APR and a $95 annual fee costs more than 22% on any balance you carry.
• Compounding. APR is a nominal annual rate. Compounded monthly, 24.99% behaves like an effective 28.06% a year, because each month's interest starts earning interest of its own. The difference between APR and APY is small at 12% (12.68%) and large at card rates.
• Variable rates. Most card APRs are the prime rate plus a margin, so the number on your statement can rise without anything changing on your side. The Federal Reserve's G.19 report shows the average rate on accounts assessed interest climbing from 16.45% in 2021 to 22.36% by August 2026 almost entirely on that mechanism.

Zero percent balance transfer offers have their own catch: the 3% to 5% transfer fee is charged upfront. On a $6,000 transfer at 3% paid off over 15 months, the fee works out to roughly 2.4% a year, still cheap compared with a 22% card, but not free. Read the fee schedule before treating any 0% as free money.

How four kinds of borrowing price the same $10,000

Where rates sit in 2026

Benchmarks make your own quote easier to judge. The Federal Reserve's G.19 consumer credit release, which surveys commercial banks monthly, put the average credit card APR at 21.19% across all accounts and 22.36% on accounts assessed interest in August 2026. The full year averages tell the recent history: 14.60% in 2021, 20.90% in 2023 and 21.22% in 2025, so card rates rose steeply with the policy rate and have stayed near their highs.

A few practical read offs follow from those benchmarks. A personal loan quote well under 21.19% is beating the average card, which is why consolidating card debt into a fixed rate loan often cuts the cost of credit even after an origination fee. A card offer above 29.99% is deep in penalty or subprime territory and deserves the fee and effective APR check before acceptance. An auto loan at 6% to 7% shows how much collateral and term matter: the same borrower can face three different price regimes for the same dollar amount.

None of these benchmarks predict your offer. Underwriting looks at your credit profile, and the spread between the best and worst rate offered to the same borrower on the same day can exceed 20 points. The G.19 averages are a yardstick, not a quote.

How to pay less for the same money

Three levers move the total, and each has a number attached in the examples above.

• Shorten the term. At 12% on $10,000, choosing 36 months over 60 saves $1,389.52 of interest, and the payment rises only from $222.44 to $332.14. If the higher payment fits the budget, the shorter loan is the cheaper credit by a wide margin.
• Shop the rate. The gap between 12% and 18% over 60 months is $1,889.39. Rate shopping among three lenders before a hard pull counts as one inquiry window, and the hours spent comparing cost per $100 is the best paid work most borrowers ever do.
• Attack the fees. Negotiating a 3% origination fee down to 1% keeps $200 in your pocket and drops the effective APR from 13.35% to 12.44% on the example loan. Ask what the fee is for; some lenders waive it on request, others price it into the rate, in which case compare the effective APR of each version.

One caution cuts the other way: stretching a loan to shrink the payment can raise the total cost even when the rate falls. Check the total row, not just the monthly one, before extending a term. Everything on this page is an estimate for comparison; your lender's disclosures govern the actual contract, and for a decision with real stakes, confirm the figures with the institution making the offer.