1. What is Credit Card Daily APR?

The Daily APR (Annual Percentage Rate) method calculates credit card interest by applying a daily interest rate to your average daily balance over the billing cycle. This is the most common method used by credit card issuers.

2. How Does the Calculator Work?

The calculator uses the daily APR formula:

Where:

• \( I \) — Monthly interest ($)
• \( ADB \) — Average daily balance ($)
• \( APR \) — Annual percentage rate (as decimal)
• \( Days \) — Number of days in billing cycle

Explanation: The equation calculates daily interest by dividing APR by 365, then multiplies by the average balance and number of days in the billing cycle.

3. Importance of Interest Calculation

Details: Understanding how credit card interest is calculated helps consumers make informed decisions about payments and debt management.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: How can I reduce my credit card interest?
A: Pay your balance in full each month, make payments early in the cycle, or negotiate a lower APR with your issuer.

Q2: Is APR the same as interest rate?
A: APR includes both interest rate and fees, giving a more complete picture of borrowing costs.

Q3: What's a good APR for a credit card?
A: As of 2023, average APRs range from 15-25%. Below 15% is considered good, while above 25% is high.

Q4: How is average daily balance calculated?
A: Sum each day's balance during the billing cycle, then divide by the number of days in the cycle.

Q5: Does making multiple payments reduce interest?
A: Yes, if payments reduce your average daily balance during the billing cycle.