1. What is Credit Card Interest?

Credit card interest is the cost of borrowing money on your credit card. It's calculated based on your annual percentage rate (APR) and your outstanding balance. Comparing rates between cards helps you understand which card would cost more in interest charges.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( P \) — Principal balance (current amount owed)
• \( R \) — Monthly interest rate (APR ÷ 12, as decimal)
• \( I \) — Monthly interest charge

Explanation: The calculator converts each card's APR to a monthly rate, then multiplies by your balance to show what you'd pay in interest each month.

3. Importance of Comparing Rates

Details: Even small APR differences can lead to significant cost variations over time. This calculator helps visualize those differences for informed financial decisions.

4. Using the Calculator

Tips: Enter your current credit card balance and the APRs for up to three cards. The calculator will show the monthly interest charge for each card.

5. Frequently Asked Questions (FAQ)

Q1: Why compare credit card rates?
A: Comparing rates helps you understand which card is most expensive to carry a balance on, potentially saving you money.

Q2: Is this the actual interest I'll pay?
A: This shows simple interest. Actual charges may vary based on billing cycles, compounding, and payment timing.

Q3: What's a good credit card APR?
A: As of 2023, average APRs range 16-24%. Rates below 16% are considered good, while above 24% is high.

Q4: Does this include fees?
A: No, this calculates interest only. Some cards have annual fees or other charges not reflected here.

Q5: How can I reduce credit card interest?
A: Pay balances in full each month, negotiate lower rates, or transfer balances to lower-rate cards.