1. What is Credit Card Interest?

Credit card interest is the cost of borrowing money on your credit card in the UK. It's calculated based on your outstanding balance and the annual percentage rate (APR) set by your card issuer.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( I \) — Monthly interest (GBP)
• \( P \) — Principal balance (GBP)
• \( R \) — Monthly interest rate (APR / 12 as decimal)

Explanation: The equation calculates how much interest you'll pay each month based on your current balance and card's APR.

3. Importance of Interest Calculation

Details: Understanding your monthly interest helps with budgeting, debt repayment planning, and comparing credit card offers in the UK market.

4. Using the Calculator

Tips: Enter your current credit card balance in GBP and the card's APR percentage. The calculator will show your estimated monthly interest charge.

5. Frequently Asked Questions (FAQ)

Q1: Is this calculation accurate for all UK credit cards?
A: Most UK cards use daily interest calculations, but this monthly estimate gives a good approximation for planning purposes.

Q2: How can I reduce my credit card interest?
A: Pay more than the minimum payment, consider balance transfers to 0% cards, or negotiate a lower APR with your provider.

Q3: What's a typical APR in the UK?
A: UK credit card APRs typically range from 18.9% to 39.9%, with average around 23-25%.

Q4: Does this include compound interest?
A: This shows simple monthly interest. Actual charges may compound if you don't pay your balance in full.

Q5: What about interest-free periods?
A: This calculator assumes you're carrying a balance. If you pay in full each month, you typically pay no interest.