How is my credit card interest computed?
Last updated: 2026-07-11 · Educational content; not legal advice.
Short answer
Interest (the finance charge) is imposed on your unpaid outstanding balance whenever you pay less than the full amount due, or pay late — and it keeps accruing on the unpaid balance until it is fully paid, subject to the BSP ceiling of 3% per month (BSP Circular 1165, 2023). RA 10870 §11 requires the issuer to disclose in writing the method it uses to determine the balance on which the charge is applied, the applicable rate expressed as a simple monthly or annual figure, and the default/late-payment fees. If you pay the full statement balance by the due date, no revolving finance charge applies to purchases.
Primary sources
Frequently asked
When does interest start?
A revolving finance charge is imposed on the unpaid outstanding balance once you pay less than the full amount due or pay after the due date, and it continues on the unpaid balance until fully paid (BSP MORB §312). Cash advances typically accrue a finance charge from the date the cash is taken.
Can they charge interest on the whole balance even after I paid part of it?
The finance charge is applied to the unpaid outstanding balance using the balance-determination method the issuer disclosed to you under RA 10870 §11. Request that written disclosure if you were never given it — the method must be stated, not hidden.
How do I avoid the finance charge entirely?
Pay the full statement balance (not just the minimum) on or before the due date; purchases then carry no revolving finance charge. Cash advances are an exception — they usually accrue interest immediately.
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