1. What is Monthly Credit Card Interest?

Monthly credit card interest is the amount charged by credit card companies on your outstanding balance. It's calculated based on your average daily balance and annual percentage rate (APR), divided by 12 months.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• Average Balance — Your average credit card balance during the billing period (USD)
• APR — Annual Percentage Rate (as a decimal)

Explanation: The formula converts the annual rate to a monthly rate by dividing by 12, then applies it to your average balance.

3. Importance of Interest Calculation

Details: Understanding how interest is calculated helps you make informed decisions about paying down credit card debt and comparing different credit card offers.

4. Using the Calculator

Tips: Enter your average credit card balance in USD and the APR as a percentage (e.g., enter 18.99 for 18.99% APR). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How can I reduce my credit card interest?
A: Pay your balance in full each month, negotiate a lower APR with your issuer, or transfer balances to a lower-interest card.

Q2: 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.

Q3: What's a good APR for a credit card?
A: As of 2023, average APRs range from 15% to 25%. Rates below 15% are considered good, while rates above 20% are high.

Q4: Does making minimum payments affect interest?
A: Yes, making only minimum payments means you'll pay much more in interest over time and take longer to pay off your balance.

Q5: How is average daily balance calculated?
A: Credit card companies typically add up each day's balance and divide by the number of days in the billing cycle.