1. What is Credit Card Interest?

Credit card interest is the amount you're charged for borrowing money, calculated based on your balance and annual percentage rate (APR). Comparing interest across multiple cards helps identify which debts to prioritize for repayment.

2. How Does the Calculator Work?

The calculator uses the simple interest formula for each card:

Where:

• \( P \) — Principal balance (current amount owed)
• \( R \) — Monthly interest rate (APR divided by 12, converted to decimal)
• \( I \) — Monthly interest charge

3. Importance of Comparing Interest

Details: Comparing monthly interest helps with debt repayment strategies. Cards with higher interest rates typically should be paid first (debt avalanche method) to minimize total interest paid.

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 charge for each, allowing easy comparison.

5. Frequently Asked Questions (FAQ)

Q1: Does this include compound interest?
A: This calculates simple monthly interest. Actual credit card interest may compound daily, but this gives a good estimate for comparison.

Q2: Should I pay off highest interest or highest balance first?
A: Mathematically, paying highest interest first saves more money, but some prefer paying smallest balances first (snowball method) for psychological wins.

Q3: How often is APR updated?
A: Variable APRs change with prime rate changes. Check your card agreement for details.

Q4: Why compare monthly interest instead of APR?
A: Monthly interest shows the actual dollar cost, which can be more meaningful than percentages when balances differ.

Q5: Does this account for new purchases?
A: No, this calculates interest on current balance only. New purchases would increase the principal.