1. What is Daily Credit Card Interest?

Daily credit card interest is the amount charged each day on your outstanding credit card balance. Credit card companies calculate interest daily based on your annual percentage rate (APR) and compound it over time.

2. How Does the Calculator Work?

The calculator uses the daily interest formula:

Where:

• \( Balance \) — Current credit card balance in currency
• \( APR \) — Annual Percentage Rate expressed as decimal (e.g., 0.15 for 15%)
• \( 365 \) — Number of days in a year for daily calculation

Explanation: This formula calculates the daily interest charge by converting the annual rate to a daily rate and applying it to your current balance.

3. Importance of Daily Interest Calculation

Details: Understanding daily interest helps consumers make informed decisions about credit card usage, plan debt repayment strategies, and avoid accumulating excessive interest charges over time.

4. Using the Calculator

Tips: Enter your current credit card balance and the APR as a decimal (divide percentage by 100). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is APR different from interest rate?
A: APR includes both the interest rate and any additional fees, providing a more comprehensive view of borrowing costs.

Q2: Why divide by 365 instead of 360?
A: Most credit card companies use 365 days for daily interest calculations, though some may use 360. Check your cardholder agreement for specific terms.

Q3: Does daily interest compound?
A: Yes, credit card interest typically compounds daily, meaning each day's interest is added to the principal for the next day's calculation.

Q4: How can I reduce daily interest charges?
A: Pay more than the minimum payment, pay early in the billing cycle, or transfer balances to lower APR cards to reduce daily interest accumulation.

Q5: What's the grace period for credit cards?
A: If you pay your full balance by the due date each month, you typically avoid interest charges entirely during the grace period.