1. What is Credit Card Monthly Interest?

Credit card monthly interest is the amount charged by credit card companies on outstanding balances. It's calculated based on your annual percentage rate (APR) divided by 12 months, applied to your current balance.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( Balance \) — Current credit card balance ($)
• \( APR \) — Annual Percentage Rate (converted to decimal)

Explanation: The APR is divided by 12 to get the monthly rate, which is then multiplied by the current balance to determine the interest charge.

3. Importance of Understanding Credit Card Interest

Details: Knowing how interest is calculated helps you understand the true cost of carrying a balance and can motivate you to pay off debts faster or negotiate better rates.

4. Using the Calculator

Tips: Enter your current credit card balance and the APR (found on your statement). The calculator will show how much interest you'll be charged for that month if you don't pay the balance in full.

5. Frequently Asked Questions (FAQ)

Q1: Is APR the same as interest rate?
A: APR includes both the interest rate and any additional fees, giving a more complete picture of borrowing costs.

Q2: How can I reduce my monthly interest charges?
A: Pay your balance in full each month, negotiate a lower APR, or transfer balances to lower-rate cards.

Q3: Does this calculator account for daily compounding?
A: This shows simple monthly interest. Most cards compound daily, which would result in slightly higher charges.

Q4: 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, while those above 25% are high.

Q5: Does paying the minimum payment avoid interest?
A: No, you must pay the full statement balance to avoid interest charges on new purchases.