1. What is the Credit Card Interest Calculator?

This calculator compares monthly interest charges across multiple credit cards based on their principal balances and APRs. It helps you understand which cards are costing you the most in interest.

2. How Does the Calculator Work?

The calculator uses the simple interest formula for each card:

Where:

• \( I \) — Monthly interest charge
• \( P \) — Principal balance (current amount owed)
• \( R \) — Monthly interest rate (APR ÷ 12, as a decimal)

Explanation: The calculator converts each card's APR to a monthly rate, then multiplies by the principal to find the monthly interest charge.

3. Importance of Interest Calculation

Details: Understanding how much interest you're paying on each card helps prioritize which debts to pay off first (typically the highest APR cards first).

4. Using the Calculator

Tips: Enter the current balance and APR for each card you want to compare. The calculator will show the monthly interest for each card side-by-side.

5. Frequently Asked Questions (FAQ)

Q1: Does this include compounding interest?
A: No, this shows simple monthly interest. Actual credit card interest may compound daily.

Q2: Should I pay off highest APR or highest balance first?
A: Mathematically, paying highest APR first saves the most money, but some prefer paying smallest balances first for psychological wins.

Q3: How can I reduce my credit card interest?
A: Pay more than the minimum, negotiate lower APRs, transfer balances to lower-rate cards, or consolidate debts.

Q4: Why compare monthly interest?
A: Monthly interest shows the actual cost of carrying balances, helping you make informed decisions about repayment strategies.

Q5: Does this calculator account for new purchases?
A: No, it calculates interest based on current balances only. New purchases would affect actual interest charges.