1. What is the Interest Calculation?

The calculator compares monthly interest charges between SBI credit card debt and potential savings account earnings using the simple interest formula I = P × R.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

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

Explanation: The calculator shows both the cost of carrying credit card debt and the potential earnings from savings, highlighting the financial difference.

3. Importance of Interest Comparison

Details: Understanding this difference helps in making informed decisions about debt repayment versus savings, as credit card interest typically far exceeds savings account earnings.

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 (default 3.5%).

5. Frequently Asked Questions (FAQ)

Q1: Why compare credit card and savings interest?
A: It highlights the opportunity cost of carrying credit card debt instead of paying it down and saving the interest.

Q2: What is typical SBI credit card APR?
A: SBI cards generally have APRs between 36-48% per annum (3-4% monthly).

Q3: Is savings interest taxed?
A: Yes, savings account interest over ₹10,000/year is taxable under Indian tax laws.

Q4: Does this account for compounding?
A: This shows simple monthly interest. Actual credit card interest may compound daily.

Q5: How can I reduce credit card interest?
A: Pay your balance in full each month, or consider balance transfers to lower-rate cards.