1. What is Credit Card Interest?

Credit card interest is the cost of borrowing money on your credit card. It's charged when you don't pay your full balance by the due date. The interest is calculated based on your balance and annual percentage rate (APR).

2. How Credit Card Interest is Calculated

The calculator uses the standard credit card interest formula:

Where:

• \( Balance \) — Your current credit card balance
• \( APR \) — Annual Percentage Rate (as a percentage)
• 12 — Number of months in a year

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

3. Understanding APR

Details: APR represents the annual cost of borrowing, including interest and fees. Credit cards typically have variable APRs ranging from 12% to 30% or more, depending on your creditworthiness.

4. Using the Calculator

Tips: Enter your current credit card balance and APR. The calculator will show your estimated monthly interest charge if you don't pay off the balance.

5. Frequently Asked Questions (FAQ)

Q1: How can I avoid paying credit card interest?
A: Pay your full statement balance by the due date each month to avoid interest charges.

Q2: Does this calculator show compound interest?
A: No, this shows simple monthly interest. Actual credit cards use daily compounding.

Q3: What's the difference between APR and interest rate?
A: APR includes both the interest rate and any fees, giving a complete picture of borrowing costs.

Q4: Why is my interest higher than this calculation?
A: Your card may use daily compounding or have additional fees not accounted for in this simple calculation.

Q5: How can I reduce my credit card interest?
A: Pay more than the minimum, transfer to a lower APR card, or negotiate with your issuer.