1. What is Credit Card Interest?

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

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( I \) — Monthly interest (currency unit)
• \( P \) — Principal balance (currency unit)
• \( R \) — Monthly interest rate (APR / 12, as a decimal)

Explanation: The formula calculates the interest you'll pay each month based on your current balance and the monthly interest rate derived from your APR.

3. Importance of Interest Calculation

Details: Understanding how interest is calculated helps you make informed decisions about paying down credit card debt and comparing different credit card offers.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: How often is credit card interest calculated?
A: Most credit cards calculate interest daily but charge it monthly based on your average daily balance.

Q2: What's a typical credit card APR?
A: APRs typically range from 12% to 25% or higher, depending on your creditworthiness and the card type.

Q3: How can I avoid paying credit card interest?
A: Pay your statement balance in full by the due date each month to avoid interest charges.

Q4: Does this calculator account for compound interest?
A: This shows simple monthly interest. Actual credit card interest may compound daily.

Q5: What if I make partial payments?
A: Interest will be calculated on your remaining balance after each payment.