1. What is Credit Card Interest Calculation?

The credit card interest calculation determines how much interest you'll pay on your outstanding balance. In the Philippines, banks typically charge interest monthly based on your annual percentage rate (APR) divided by 12.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( I \) — Monthly interest (PHP)
• \( P \) — Principal balance (PHP)
• \( R \) — Monthly interest rate (APR / 12 as decimal)

Explanation: The formula calculates the interest you'll pay each month on your outstanding credit card balance.

3. Importance of Interest Calculation

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

4. Using the Calculator

Tips: Enter your current principal balance in PHP and the annual percentage rate (APR) as shown on your credit card statement. All values must be valid (principal > 0, APR ≥ 0).

5. Frequently Asked Questions (FAQ)

Q1: How is APR different from monthly interest rate?
A: APR is the annual rate, while the monthly rate is APR divided by 12. For example, 36% APR = 3% monthly rate.

Q2: Do all Philippine banks use this calculation?
A: Most banks use this basic calculation, but some may have additional fees or different compounding methods.

Q3: What's a typical APR in the Philippines?
A: Credit card APRs in the Philippines typically range from 24% to 42% annually.

Q4: How can I reduce my interest payments?
A: Pay your balance in full each month, or pay more than the minimum amount due to reduce principal faster.

Q5: Does this include other credit card fees?
A: No, this calculates only the interest. Other fees like annual fees or late payment charges are not included.