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 balance, annual percentage rate (APR), and the number of days you carry that balance.

2. How Does the Calculator Work?

The calculator uses the daily interest formula:

Where:

• \( Balance \) — Current credit card balance ($)
• \( APR \) — Annual Percentage Rate (converted to daily rate)
• \( Days \) — Number of days carrying the balance

Explanation: The APR is divided by 365 to get the daily rate, then multiplied by the balance and number of days.

3. Importance of Understanding Interest

Details: Knowing how interest is calculated helps you make informed decisions about payments and understand the true cost of carrying a balance.

4. Using the Calculator

Tips: Enter your current balance in dollars, APR as a percentage (e.g., 18.99), and the number of days you'll carry that balance.

5. Frequently Asked Questions (FAQ)

Q1: Is interest charged if I pay my balance in full?
A: Typically no - most cards have a grace period if you pay the full statement balance by the due date.

Q2: How can I reduce my interest charges?
A: Pay more than the minimum, pay early in the billing cycle, or transfer to a lower APR card.

Q3: Does this calculator work for compound interest?
A: This calculates simple daily interest. Actual credit cards use daily compounding in most cases.

Q4: What's a good APR for a credit card?
A: Rates vary, but generally under 15% is good for non-introductory rates. Excellent credit can get rates under 12%.

Q5: How often is APR applied?
A: APR is annual, but interest is typically calculated daily and applied monthly to your balance.