1. What is Credit Card Interest?

Credit card interest in the Philippines is calculated monthly based on your outstanding balance and annual percentage rate (APR). It's important to understand how interest accumulates to manage credit card debt effectively.

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 equation calculates the monthly interest by multiplying the principal balance by the monthly interest rate (APR divided by 12).

3. Importance of Interest Calculation

Details: Understanding monthly interest helps Filipinos plan repayments, avoid debt traps, and make informed decisions about credit card usage.

4. Using the Calculator

Tips: Enter your current credit card balance in PHP and the annual percentage rate (APR) as shown on your statement. Typical Philippine credit card APRs range from 24% to 36% annually.

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.

Q2: Do all Philippine credit cards use this calculation?
A: Most use this method, but some may have different terms. Always check your card agreement.

Q3: When is interest charged?
A: Interest is charged when you don't pay your full statement balance by the due date.

Q4: How can I reduce interest payments?
A: Pay your balance in full each month, or make payments as soon as possible to reduce the principal.

Q5: Are there additional fees in the Philippines?
A: Yes, some banks may charge late payment fees (PHP 300-1,000) or overlimit fees on top of interest.