1. What is the Credit Card Interest Calculator?

This calculator estimates the monthly interest you'll pay on your credit card balance based on the principal amount and annual percentage rate (APR), following the Money Advice Service guidelines.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

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

Explanation: The equation calculates the monthly interest charge by multiplying your outstanding balance by the monthly interest rate (APR divided by 12).

3. Importance of Interest Calculation

Details: Understanding your monthly interest charges helps with budgeting and demonstrates how carrying a balance can significantly increase your debt over time.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Is this the actual interest I'll pay?
A: This is an estimate. Your actual interest may vary based on payment timing, compounding, and any fees.

Q2: What if I make partial payments?
A: This calculator assumes no payments are made. Making payments will reduce your principal and subsequent interest.

Q3: How often is interest charged?
A: Typically daily, but shown here as a monthly total for simplicity.

Q4: Does this include compound interest?
A: No, this shows simple monthly interest. Actual credit cards use daily compounding.

Q5: How can I reduce my interest payments?
A: Pay your balance in full each month, transfer to a lower APR card, or negotiate with your provider.