1. What is the Interest Calculation?

The interest calculation estimates how much interest you'll pay when making only the minimum payment on a credit card. It shows the monthly interest based on your current balance and APR.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

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

Explanation: The equation calculates the interest you'll pay each month when only making minimum payments, which can help you understand the true cost of carrying a balance.

3. Importance of Interest Calculation

Details: Understanding how much interest you're paying can motivate paying down balances faster and help with financial planning to reduce debt.

4. Using the Calculator

Tips: Enter your current credit card balance in dollars and your APR as a percentage. All values must be valid (balance > 0, APR ≥ 0).

5. Frequently Asked Questions (FAQ)

Q1: Why calculate interest on minimum payments?
A: It shows how much you're actually paying in interest when only making minimum payments, which is often much more than people realize.

Q2: How does APR affect my interest?
A: Higher APRs result in more interest paid each month. Even small APR differences can add up significantly over time.

Q3: Is this the actual interest I'll pay?
A: This is an estimate. Actual interest may vary if your balance changes during the billing cycle.

Q4: What if I pay more than the minimum?
A: Paying more than the minimum reduces your principal faster, resulting in less interest paid over time.

Q5: How can I reduce my interest payments?
A: Paying down your balance, transferring to a lower APR card, or negotiating a lower rate with your issuer can all help reduce interest.