1. What is the 30-Day Credit Card Interest Formula?

The 30-day credit card interest formula calculates how much interest you'll pay on your credit card balance over a 30-day period based on your average daily balance and annual percentage rate (APR).

2. How Does the Calculator Work?

The calculator uses the following equation:

Where:

• \( I \) — Interest charge for 30 days
• \( ADB \) — Average daily balance
• \( APR \) — Annual percentage rate (as a decimal)

Explanation: The equation first converts the annual rate to a daily rate (APR/365), then multiplies by the average balance and number of days (30).

3. Importance of Credit Card Interest Calculation

Details: Understanding how interest is calculated helps consumers make informed decisions about credit card use and debt repayment strategies.

4. Using the Calculator

Tips: Enter your average daily balance in dollars and APR as a percentage. For example, for an APR of 18.99%, enter 18.99.

5. Frequently Asked Questions (FAQ)

Q1: How is average daily balance calculated?
A: Add up each day's ending balance and divide by the number of days in the billing cycle.

Q2: Does this include compound interest?
A: This calculates simple interest. Most credit cards compound interest daily, making actual charges slightly higher.

Q3: What if I make payments during the month?
A: Payments will reduce your average daily balance, resulting in less interest. For precise calculations, you'd need daily balance information.

Q4: Are there other fees not included here?
A: Yes, this only calculates interest. Late fees, annual fees, or other charges would be additional.

Q5: How can I reduce my interest charges?
A: Pay your balance in full each month, make payments early in the billing cycle, or negotiate a lower APR with your issuer.