1. What is Credit Card Interest?

Credit card interest is the cost of borrowing money on your credit card in Canada. 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 (CAD)
• \( P \) — Principal balance (CAD)
• \( R \) — Monthly interest rate (APR / 12 as decimal)

Explanation: The equation calculates how much interest you'll pay each month based on your current balance and annual interest rate.

3. Importance of Interest Calculation

Details: Understanding your monthly interest helps with budgeting and shows the true cost of carrying a credit card balance in Canada.

4. Using the Calculator

Tips: Enter your current credit card balance in CAD and your card's APR percentage. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Is this how Canadian credit cards actually calculate interest?
A: Most Canadian credit cards use daily compounding, but this calculator provides a good monthly estimate for planning purposes.

Q2: What's a typical APR in Canada?
A: Canadian credit card APRs typically range from 19.99% to 29.99% for standard cards.

Q3: How can I reduce my interest payments?
A: Pay your balance in full each month, transfer to a lower-rate card, or negotiate with your issuer for a better rate.

Q4: Does this include fees?
A: No, this calculates interest only. Additional fees may apply depending on your card agreement.

Q5: Why is my actual interest sometimes different?
A: Actual interest may vary due to daily compounding, grace periods, or transaction timing differences.