1. What is Minimum Payment Interest?

The minimum payment interest is the amount of interest you'll pay when making only the minimum payment on your credit card balance. This calculation shows how much of your payment goes toward interest rather than reducing your principal balance.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

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

Explanation: The formula calculates how much interest accrues in one month when only making minimum payments.

3. Importance of Calculating Minimum Payment Interest

Details: Understanding this calculation helps consumers realize how much they're paying in interest and how making only minimum payments can lead to long-term debt.

4. Using the Calculator

Tips: Enter your current credit card balance and annual percentage rate (APR). The calculator will show how much interest you'll pay in one month with minimum payments.

5. Frequently Asked Questions (FAQ)

Q1: Is this the actual minimum payment amount?
A: No, this calculates just the interest portion. Minimum payments typically include this interest plus 1-3% of the principal.

Q2: Why does my credit card statement show different numbers?
A: Some cards use daily periodic rates or have different calculation methods. This provides a simplified estimate.

Q3: How can I reduce my interest payments?
A: Pay more than the minimum, pay early in the billing cycle, or negotiate a lower APR with your card issuer.

Q4: Does this include compounding interest?
A: This is a simple monthly calculation. Actual interest may compound daily in practice.

Q5: What if I have an introductory 0% APR?
A: During the introductory period, your interest would be $0, but minimum payments would still apply to the principal.