1. What is the Credit Card Interest Calculation?

The credit card interest calculation determines how much interest you'll pay on your balance over a 30-day period based on your average daily balance and annual percentage rate (APR).

2. How Does the Calculator Work?

The calculator uses the credit card interest formula:

Where:

• \( I \) — Interest charge for 30 days
• \( ADB \) — Average daily balance
• \( APR \) — Annual percentage rate (as a percentage)

Explanation: The equation calculates daily interest by dividing APR by 365 days, then multiplies by the average daily balance and 30 days.

3. Importance of Interest Calculation

Details: Understanding how interest is calculated helps consumers make informed decisions about credit card usage and repayment strategies.

4. Using the Calculator

Tips: Enter your average daily balance in dollars and APR as a percentage (e.g., 18.99). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

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

Q2: Does this include compound interest?
A: This calculates simple interest for 30 days. Most credit cards compound daily, but this gives a close estimate.

Q3: What's a typical credit card APR?
A: APRs typically range from 12% to 30%, depending on creditworthiness and card type.

Q4: How can I reduce my interest charges?
A: Pay your balance in full each month, make payments early in the billing cycle, or transfer to a lower APR card.

Q5: Are there fees not included in this calculation?
A: Yes, this doesn't include late fees, annual fees, or other potential credit card charges.