1. What is Credit Card Interest?

Credit card interest is the amount charged by credit card issuers on outstanding balances. It's calculated based on your annual percentage rate (APR) and your average daily balance.

2. How Does the Calculator Work?

The calculator uses the credit card interest formula:

Where:

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

Explanation: The equation calculates the monthly interest by converting the annual rate to a monthly rate and applying it to your principal balance.

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 Rs and the annual percentage rate (APR) as shown on your statement. All values must be valid (balance > 0, APR ≥ 0).

5. Frequently Asked Questions (FAQ)

Q1: How can I reduce my credit card interest?
A: Pay your balance in full each month, negotiate a lower APR, or transfer balances to a lower-interest card.

Q2: Is APR the same as interest rate?
A: APR includes both the interest rate and any additional fees, giving a more complete picture of borrowing costs.

Q3: When is interest charged on credit cards?
A: Interest is typically charged when you carry a balance past the grace period (usually 21-25 days after statement closing).

Q4: Does making minimum payments avoid interest?
A: No, you'll still accrue interest on the remaining balance unless you pay the full statement balance.

Q5: How is daily periodic rate calculated?
A: Divide your APR by 365 (some issuers use 360) to get the daily rate, which is applied to your average daily balance.