1. What is the Interest Calculation Formula?

The formula calculates monthly interest for both credit card debt and savings account earnings using the principal balance and respective interest rates.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( I \) — Monthly interest (PHP)
• \( P \) — Principal balance (PHP)
• \( R \) — Monthly interest rate (APR / 12 for credit card or savings rate / 12)

Explanation: The calculator converts annual percentage rates (APR) to monthly rates by dividing by 12, then multiplies by the principal to get monthly interest.

3. Importance of Interest Calculation

Details: Understanding the difference between credit card interest costs and savings account earnings helps in financial planning and debt management.

4. Using the Calculator

Tips: Enter principal balance in PHP, credit card APR in %, and savings account rate in %. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the typical BPI credit card APR?
A: BPI credit cards typically have APRs ranging from 2% to 3% per month (24% to 36% annually).

Q2: What is the current BPI savings account rate?
A: Regular savings accounts typically earn 0.125% to 0.5% annually, while higher-yield accounts may offer more.

Q3: Why is credit card interest higher than savings?
A: Credit cards charge higher rates due to unsecured lending risk, while savings rates reflect bank borrowing costs.

Q4: Does this include compounding effects?
A: This shows simple monthly interest. Actual credit card interest may compound daily.

Q5: How can I reduce credit card interest?
A: Pay balances in full each month, transfer to lower-rate cards, or negotiate with your bank.