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 average daily balance, annual percentage rate (APR), and the number of days in your billing cycle.

2. How Does the Calculator Work?

The calculator uses the standard 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 calculates daily interest by converting APR to a daily rate, then multiplies by the average balance and number of days.

3. Understanding Your Credit Card Interest

Details: Knowing how interest is calculated helps you make informed decisions about paying off balances and comparing credit card offers.

4. Using the Calculator

Tips: Enter your average daily balance (sum of daily balances divided by days in cycle), your APR (found on your statement), and the number of days in your billing cycle (typically 28-31).

5. Frequently Asked Questions (FAQ)

Q1: How can I avoid paying credit card interest?
A: Pay your statement balance in full by the due date each month to avoid interest charges.

Q2: Does this calculator work for all credit cards?
A: Most cards use this method, but some may have different calculation methods - check your cardholder agreement.

Q3: What's the difference between APR and interest rate?
A: For credit cards, they're essentially the same - the annual rate used to calculate interest charges.

Q4: How can I reduce my credit card interest?
A: Pay more than the minimum, make payments early in the cycle, or transfer to a lower APR card.

Q5: Why is my actual interest slightly different?
A: This calculator provides an estimate. Actual interest may vary due to rounding, transaction timing, or fees.