1. What is Credit Card Interest?

Credit card interest is the cost of borrowing money on your credit card. It's calculated based on your outstanding balance and the annual percentage rate (APR) set by your credit card issuer.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

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

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

3. Importance of Interest Calculation

Details: Understanding your monthly interest helps with budgeting, debt repayment planning, and comparing credit card offers.

4. Using the Calculator

Tips: Enter your current credit card balance and the APR from your card agreement. All values must be valid (balance > 0, APR ≥ 0).

5. Frequently Asked Questions (FAQ)

Q1: How often is credit card interest calculated?
A: Most cards calculate interest daily but charge it monthly based on your average daily balance.

Q2: What's a good APR for a credit card?
A: As of 2023, average APRs range from 15-25%. Rates below 15% are considered good.

Q3: How can I avoid paying interest?
A: Pay your statement balance in full by the due date each month to avoid interest charges.

Q4: Does this calculator account for compound interest?
A: This shows simple monthly interest. Actual charges may vary slightly due to daily compounding.

Q5: Why is my actual interest different?
A: Your card may use average daily balance method, include fees, or have different calculation periods.