1. What is the Interest Calculation?

This calculator compares monthly interest for HDFC credit card debt versus potential savings account earnings. It helps visualize the cost of carrying credit card debt versus keeping money in savings.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( I \) — Monthly interest (INR)
• \( P \) — Principal balance (INR)
• \( R \) — Monthly interest rate (APR / 12 for credit card or savings rate / 12, as decimal)

Explanation: The equation calculates what you pay in credit card interest versus what you could earn in savings interest for the same amount.

3. Importance of Interest Comparison

Details: Understanding this difference helps make informed decisions about debt repayment versus savings. Credit card interest typically far exceeds savings interest.

4. Using the Calculator

Tips: Enter your current credit card balance, the card's APR (usually 24-48% in India), and your savings account interest rate (default 3.5%).

5. Frequently Asked Questions (FAQ)

Q1: Why compare credit card and savings interest?
A: It shows the opportunity cost of carrying debt - the money you're losing that could be earning interest instead.

Q2: What's a typical HDFC credit card APR?
A: Usually 24-48% annually in India (2-4% monthly), much higher than savings rates (3-7% annually).

Q3: Is this calculation exact for credit cards?
A: It's simplified - actual credit card interest may compound daily, but this gives a good estimate.

Q4: What about taxes on savings interest?
A: Savings interest is taxable, while credit card interest isn't deductible - making the real difference even larger.

Q5: Should I prioritize savings or debt repayment?
A: Generally pay high-interest debt first, as it costs more than savings earn (but maintain emergency funds).