1. What is Credit Card Interest?

Credit card interest is what you're charged when you don't pay off your balance in full each month. It's calculated based on your outstanding balance and the annual percentage rate (APR) of your card.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( I \) — Monthly interest charge (GBP)
• \( P \) — Principal balance (GBP)
• \( R \) — Monthly interest rate (annual rate / 12, as a decimal)

Explanation: The formula calculates how much interest you'll pay each month based on your current balance and card's APR.

3. Importance of Interest Calculation

Details: Understanding your monthly interest helps you make informed decisions about paying down debt and comparing credit card offers.

4. Using the Calculator

Tips: Enter your current credit card balance in GBP and the annual interest rate (APR) as a percentage. All values must be valid (balance > 0, rate between 0-100).

5. Frequently Asked Questions (FAQ)

Q1: Why calculate monthly interest?
A: Knowing your monthly interest helps you understand the true cost of carrying a balance and motivates debt repayment.

Q2: How can I reduce my interest payments?
A: Pay more than the minimum payment, consider a 0% balance transfer card, or negotiate a lower rate with your provider.

Q3: Is this the exact amount I'll be charged?
A: This is an estimate. Actual charges may vary slightly depending on your card's billing cycle and compounding method.

Q4: What about minimum payments?
A: Minimum payments typically cover interest plus a small percentage of principal. Paying only the minimum extends debt repayment significantly.

Q5: Does this include fees?
A: No, this calculates interest only. Some cards may have additional fees that aren't included in this calculation.