1. What is Credit Card Interest Savings?

The credit card interest savings calculation compares the interest you would pay with a higher APR versus a lower APR. This helps quantify the potential savings from switching to a card with a better interest rate.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( I_{old} \) — Interest paid with higher APR
• \( I_{new} \) — Interest paid with lower APR
• \( S \) — Savings from lower interest rate

Explanation: The calculation shows the direct savings from paying less interest when you switch to a credit card with a lower annual percentage rate (APR).

3. Importance of Comparing Interest Rates

Details: Understanding potential interest savings can help you make informed decisions about credit card choices and balance transfers, potentially saving hundreds in interest payments annually.

4. Using the Calculator

Tips: Enter the interest amounts you would pay with your current card (higher APR) and the potential new card (lower APR). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do I find my current interest payment?
A: Check your credit card statement for the interest charged each month or annually.

Q2: What's a good APR for a credit card?
A: Rates vary, but generally anything below 15% is considered good for standard cards.

Q3: Does this account for balance transfer fees?
A: No, this calculator only compares interest payments. Factor in any transfer fees separately.

Q4: Should I always choose the lowest APR card?
A: Not necessarily - also consider annual fees, rewards, and other card features.

Q5: How often should I compare credit card rates?
A: At least annually, or whenever your credit score improves significantly.