1. What is Credit Card Interest?

Credit card interest is the cost of borrowing money on your credit card. This calculator shows how much interest you'd pay each month on a $100 balance based on your card's APR.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( I \) — Monthly interest in dollars
• \( 100 \) — Principal balance ($100)
• \( R \) — Monthly interest rate (APR ÷ 12 ÷ 100)

Explanation: The equation calculates simple monthly interest on a $100 balance by converting APR to a monthly decimal rate.

3. Importance of Interest Calculation

Details: Understanding how much interest accrues helps consumers make informed decisions about paying down credit card debt and comparing card offers.

4. Using the Calculator

Tips: Enter your credit card's APR percentage. The calculator will show the monthly interest charged on a $100 balance.

5. Frequently Asked Questions (FAQ)

Q1: Is this the actual interest I'll pay?
A: This shows simple interest. Actual credit cards use daily compounding which may result in slightly higher interest.

Q2: Why use $100 as the balance?
A: It provides a standardized way to compare interest costs across different credit cards.

Q3: What's a typical credit card APR?
A: As of 2023, average APRs range from 15% to 25%, with higher rates for those with poor credit.

Q4: How can I reduce my interest payments?
A: Pay your balance in full each month, negotiate a lower APR, or transfer balances to lower-rate cards.

Q5: Does this include fees?
A: No, this calculates interest only. Some cards may have additional annual or transaction fees.