1. What is Credit Card APR?

APR (Annual Percentage Rate) represents the yearly cost of borrowing money, including interest and fees. The monthly interest is calculated by converting the annual rate to a monthly rate and applying it to your principal balance.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( I \) — Monthly interest (Rs)
• \( P \) — Principal balance (Rs)
• \( R \) — Monthly interest rate (APR / 12 / 100)

Explanation: The formula calculates how much interest you'll pay each month based on your current balance and annual interest rate.

3. Importance of APR Calculation

Details: Understanding your monthly interest helps with budgeting and shows the true cost of carrying a credit card balance. It's essential for comparing credit card offers and managing debt.

4. Using the Calculator

Tips: Enter your current credit card balance in Rs and the annual APR percentage. The calculator will show your estimated monthly interest payment.

5. Frequently Asked Questions (FAQ)

Q1: Is APR the same as interest rate?
A: APR includes both the interest rate and any additional fees, giving a more complete picture of borrowing costs.

Q2: How can I reduce my monthly interest?
A: Pay down your principal balance, negotiate a lower APR with your issuer, or transfer to a card with 0% introductory APR.

Q3: Why is my APR so high?
A: Credit card APRs vary based on creditworthiness, prime rate changes, and card type. Poor credit scores typically result in higher APRs.

Q4: Does this include compound interest?
A: This calculates simple monthly interest. Actual credit cards typically compound interest daily, which would result in slightly higher charges.

Q5: What's a good APR for a credit card?
A: As of 2023, average APRs range from 15-25%. Rates below 15% are considered good, while those above 25% are quite high.