1. What is Credit Card Interest?

Credit card interest is the fee charged for carrying an unpaid balance on your credit card. It's calculated based on your annual percentage rate (APR) and the unpaid principal balance.

2. How Does the Calculator Work?

The calculator uses the credit card interest formula:

Where:

• \( I \) — Monthly interest charge ($)
• \( P \) — Unpaid principal balance ($)
• \( R \) — Monthly interest rate (APR / 12, as decimal)

Explanation: The equation calculates how much interest you'll pay each month on your unpaid credit card balance.

3. Importance of Interest Calculation

Details: Understanding your monthly interest helps with budgeting and demonstrates the true cost of carrying credit card debt.

4. Using the Calculator

Tips: Enter your unpaid balance in dollars and your APR as a percentage. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is APR different from interest rate?
A: APR includes both the interest rate and any additional fees, giving a more complete picture of borrowing costs.

Q2: When is credit card interest charged?
A: Interest is typically charged when you carry a balance past the due date. Paying in full each month avoids interest.

Q3: How can I reduce my credit card interest?
A: Pay more than the minimum payment, pay on time, or consider transferring to a lower-interest card.

Q4: Does this calculator account for daily compounding?
A: This provides a simplified monthly estimate. Actual interest may vary slightly due to daily compounding.

Q5: What's a good APR for a credit card?
A: Rates vary, but generally under 15% is good for standard cards, while rewards cards may have higher APRs.