1. What is the APR Calculation?

The Annual Percentage Rate (APR) calculation helps you understand the true cost of borrowing on your credit card, including both interest and fees. It provides a standardized way to compare different credit card offers.

2. How Does the Calculator Work?

The calculator uses the APR formula:

Where:

• \( I \) — Total interest paid (Rs)
• \( F \) — Fees (Rs)
• \( P \) — Principal amount (Rs)
• \( T \) — Loan term (years)
• \( APR \) — Annual percentage rate (%)

Explanation: The equation calculates the annualized cost of borrowing as a percentage of the principal amount, accounting for both interest and fees.

3. Importance of APR Calculation

Details: Understanding APR helps consumers compare different credit card offers and understand the true cost of carrying a balance. Lower APRs mean lower borrowing costs.

4. Using the Calculator

Tips: Enter all amounts in Rs. The principal and term must be greater than zero. For credit cards, the term is typically the repayment period you're considering.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between APR and interest rate?
A: APR includes both interest rate and fees, giving a more complete picture of borrowing costs.

Q2: What is a good APR for credit cards?
A: As of 2023, average credit card APRs range from 15% to 25%. Below 15% is considered good.

Q3: How does repayment term affect APR?
A: Shorter repayment terms result in higher APR calculations because fees are spread over less time.

Q4: Does this calculator work for other loans?
A: Yes, this formula can be used for any loan where you know the interest, fees, principal and term.

Q5: Why is APR important for credit cards?
A: It helps you understand the true cost of carrying a balance and compare different card offers.