1. What is Minimum Credit Card Interest?

The minimum interest is what you'll pay each month if you only make the minimum payment on your credit card balance. It's calculated based on your outstanding balance and annual percentage rate (APR).

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

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

Explanation: The calculator converts your APR to a monthly rate, then multiplies it by your current balance to estimate the interest portion of your minimum payment.

3. Importance of Interest Calculation

Details: Understanding how interest accumulates helps you make informed decisions about paying down credit card debt and avoiding long-term financial strain.

4. Using the Calculator

Tips: Enter your current credit card balance and APR. The calculator will show how much interest you'll pay if you only make minimum payments.

5. Frequently Asked Questions (FAQ)

Q1: Is this the actual minimum payment?
A: No, this is just the interest portion. Minimum payments typically include this interest plus 1-3% of the principal.

Q2: How can I reduce my interest payments?
A: Pay more than the minimum, pay more frequently, or transfer to a lower APR card.

Q3: Does this include compound interest?
A: This shows simple monthly interest. Actual interest may compound daily in practice.

Q4: Why is my actual interest different?
A: Your card may use daily compounding, or your balance may change during the billing cycle.

Q5: How accurate is this calculator?
A: It provides a good estimate but check your card terms for exact calculation methods.