1. What is Credit Card Interest?

Credit card interest is the amount charged by lenders for borrowing money on your credit card. In the UK, it's typically expressed as an Annual Percentage Rate (APR) which is then divided by 12 for monthly calculations.

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 and shows the true cost of carrying a credit card balance. It can motivate faster debt repayment.

4. Using the Calculator

Tips: Enter your current credit card balance in GBP and your card's APR percentage. All values must be valid (balance > 0, APR ≥ 0).

5. Frequently Asked Questions (FAQ)

Q1: Is this calculation accurate for all UK credit cards?
A: This provides a basic estimate. Some cards may use daily compounding or have different calculation methods.

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

Q3: Does this include fees?
A: No, this calculates interest only. Some cards may have additional monthly or annual fees.

Q4: What's a typical APR in the UK?
A: As of 2023, UK credit card APRs typically range from 19% to 30%, with some specialist cards outside this range.

Q5: Why is my actual interest sometimes different?
A: Interest may be calculated daily but charged monthly, and your balance likely changes throughout the month.