1. What is the Interest Calculation?

This calculator compares the monthly interest you pay on SBI credit card debt versus the interest you earn on savings account balance. Understanding this difference helps in financial planning.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( I \) — Monthly interest (INR)
• \( P \) — Principal balance (INR)
• \( R \) — Monthly interest rate (APR / 12 for credit card or savings rate / 12)

Explanation: The calculator converts annual rates to monthly rates by dividing by 12, then multiplies by the principal amount to show monthly interest.

3. Importance of Interest Comparison

Details: Comparing credit card interest costs with savings interest earnings highlights the financial impact of carrying credit card debt versus saving money.

4. Using the Calculator

Tips: Enter your current credit card balance, the card's APR (typically 36-48% for SBI cards), and your savings account interest rate (typically 3-7%).

5. Frequently Asked Questions (FAQ)

Q1: Why is credit card interest so much higher?
A: Credit cards are unsecured debt with higher risk for banks, hence higher rates. Savings accounts are secured deposits with lower returns.

Q2: How can I reduce credit card interest?
A: Pay your balance in full each month, transfer to lower-rate cards, or negotiate with your bank for better terms.

Q3: Are savings interest rates taxed?
A: Yes, interest earned over ₹10,000 per year is taxable under Income Tax Act.

Q4: What's the typical SBI credit card APR?
A: Most SBI cards charge 36-48% APR, which means 3-4% monthly interest.

Q5: How often is savings interest compounded?
A: Most banks compound savings interest quarterly, but this calculator shows simple monthly interest for direct comparison.