1. What is Daily Credit Card Interest?

Daily credit card interest is calculated based on your average daily balance, annual percentage rate (APR), and the number of days in your billing cycle. Understanding this calculation helps you estimate how much interest you'll pay on carried balances.

2. How Does the Calculator Work?

The calculator uses the daily credit card interest formula:

Where:

• \( ADB \) — Average daily balance ($)
• \( APR \) — Annual percentage rate (as percentage)
• \( Days \) — Number of days in billing cycle
• \( I \) — Calculated interest ($)

Explanation: The formula converts APR to a daily rate, then multiplies by the average balance and number of days to determine total interest.

3. Importance of Interest Calculation

Details: Calculating daily interest helps consumers understand the true cost of carrying credit card balances and make informed decisions about debt repayment.

4. Using the Calculator

Tips: Enter your average daily balance in dollars, APR as a percentage (e.g., 18.99), and number of days in billing cycle (typically 28-31). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is average daily balance calculated?
A: Add up each day's balance in the billing cycle, then divide by the number of days in the cycle.

Q2: Does this include compound interest?
A: This calculates simple daily interest. Most credit cards compound interest daily, which would slightly increase total interest.

Q3: What if I make payments during the cycle?
A: Payments reduce your daily balance, so you should calculate ADB based on actual daily balances after payments.

Q4: Is interest charged if I pay my full balance?
A: Typically no, if you pay the statement balance by the due date. Interest only applies to carried balances.

Q5: How can I reduce my credit card interest?
A: Pay balances in full each month, make payments early in the cycle, or negotiate a lower APR with your issuer.