1. What is Credit Card Interest Calculation?

The credit card interest calculation determines how much you'll pay in interest charges on your outstanding balance. In the Philippines, banks typically charge interest monthly based on your annual percentage rate (APR).

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( P \) — Principal balance (PHP)
• \( R \) — Monthly interest rate (APR / 12, as decimal)
• \( I \) — Monthly interest charge (PHP)

Explanation: The formula calculates the monthly interest by multiplying your outstanding balance by the monthly interest rate (APR divided by 12).

3. Importance of Interest Calculation

Details: Understanding your interest charges helps in managing credit card debt effectively and making informed decisions about payments and spending.

4. Using the Calculator

Tips: Enter your current credit card balance in PHP and your card's APR percentage. The calculator will show your estimated monthly interest charge.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical APR in the Philippines?
A: Credit card APRs in the Philippines typically range from 24% to 36% annually (2% to 3% monthly).

Q2: When is interest charged on my credit card?
A: Interest is charged when you don't pay your full statement balance by the due date.

Q3: How can I reduce my interest charges?
A: Pay your balance in full each month, or make payments as soon as possible to reduce the average daily balance.

Q4: Does this include other fees?
A: No, this calculates only the interest. Late payment fees and other charges may apply separately.

Q5: Is interest compounded daily?
A: Many Philippine credit cards use average daily balance method with daily compounding, but this calculator provides a simplified monthly estimate.