1. What is Credit Card Interest?

Credit card interest is the amount you're charged for borrowing money, calculated as a percentage of your outstanding balance. The Bankrate method calculates monthly interest using your principal balance and APR.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

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

Explanation: First convert APR to monthly rate by dividing by 12, then multiply by your balance to find the interest charge.

3. Importance of Interest Calculation

Details: Understanding your monthly interest helps with debt repayment planning, comparing credit cards, and avoiding costly minimum payments.

4. Using the Calculator

Tips: Enter your current credit card balance and APR. The calculator will show your estimated monthly interest charge.

5. Frequently Asked Questions (FAQ)

Q1: Is this the actual interest I'll pay?
A: This is an estimate. Actual interest may vary based on billing cycle, payment timing, and compounding.

Q2: How can I reduce my interest payments?
A: Pay more than the minimum, pay early in the billing cycle, or negotiate a lower APR.

Q3: Does this include fees?
A: No, this calculates only interest. Late fees, annual fees, etc. are additional.

Q4: Why is my APR important?
A: Higher APR means more interest on carried balances. Even small APR differences can cost hundreds over time.

Q5: How often is interest calculated?
A: Typically daily (using daily periodic rate = APR/365) but charged monthly.