1. What is Daily Credit Card Interest?

Credit card interest is calculated daily based on your average daily balance, annual percentage rate (APR), and the number of days in your billing cycle. Understanding this helps you manage credit card debt more effectively.

2. How Does the Calculator Work?

The calculator uses the daily interest formula:

Where:

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

Explanation: The formula calculates how much interest accrues daily on your credit card balance, then multiplies by the number of days in your billing cycle.

3. Importance of Interest Calculation

Details: Knowing how interest is calculated helps you understand the true cost of carrying a balance and can motivate you to pay off debt faster.

4. Using the Calculator

Tips: Enter your average daily balance in dollars, APR as a percentage (e.g., 18.99), and the number of days in your billing cycle (typically 28-31).

5. Frequently Asked Questions (FAQ)

Q1: How is average daily balance calculated?
A: Add up each day's ending balance, then divide by the number of days in the billing cycle.

Q2: Does this include compound interest?
A: No, this calculates simple daily interest. Most cards compound interest daily but charge it monthly.

Q3: Why divide APR by 365?
A: This converts the annual rate to a daily rate for daily interest calculations.

Q4: How can I reduce my interest charges?
A: Pay your balance in full each month, make payments earlier in the billing cycle, or negotiate a lower APR.

Q5: Are there other fees not included here?
A: Yes, late fees, annual fees, and other charges may apply beyond the calculated interest.