1. What is the Credit Card Interest Calculation?

The credit card interest calculation determines how much interest you'll pay each month on your outstanding balance. The Absa calculator also shows potential savings from making overpayments.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( I \) — Monthly interest amount (ZAR)
• \( P \) — Principal balance (ZAR)
• \( R \) — Monthly interest rate (annual rate / 12, as decimal)

Savings Calculation: When you make an overpayment, the calculator shows how much interest you'll save by reducing your principal balance.

3. Importance of Interest Calculation

Details: Understanding your monthly interest helps with budgeting and shows the financial benefit of paying more than the minimum payment.

4. Using the Calculator

Tips: Enter your current balance, annual interest rate, and any additional amount you plan to pay. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is the monthly rate calculated?
A: Your annual rate is divided by 12 to get the monthly rate (converted from percentage to decimal).

Q2: Does this include compounding?
A: This shows simple monthly interest. Actual credit cards may compound daily or monthly.

Q3: How much can I save by overpaying?
A: Every extra rand paid reduces your principal, lowering future interest calculations.

Q4: What's Absa's typical credit card rate?
A: Rates vary but are typically between 15-25% annually, depending on card type and creditworthiness.

Q5: When is interest charged?
A: Interest is typically charged if you don't pay your full statement balance by the due date.