1. What is the Credit Card Interest Calculation?

The credit card interest calculation formula estimates the interest charged on outstanding credit card balances in India. It calculates interest based on average daily balance, monthly interest rate, and number of days in the billing cycle.

2. How Does the Calculator Work?

The calculator uses the standard interest formula:

Where:

• \( I \) — Interest amount (INR)
• \( ADB \) — Average Daily Balance (INR)
• \( R \) — Monthly Interest Rate (%)
• \( D \) — Number of days in billing cycle

Explanation: The formula calculates interest by multiplying the average daily balance by the interest rate and number of days, then dividing by the standard 30-day month basis.

3. Importance of Interest Calculation

Details: Understanding credit card interest calculations helps consumers manage their debt better, plan repayments, and avoid excessive interest charges that can accumulate quickly.

4. Using the Calculator

Tips: Enter average daily balance in INR, monthly interest rate as a percentage, and number of days in billing cycle (typically 30). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is Average Daily Balance (ADB)?
A: ADB is the sum of daily outstanding balances divided by the number of days in the billing cycle.

Q2: How is monthly interest rate converted from annual rate?
A: Monthly rate = Annual rate ÷ 12. For example, 24% annual rate = 2% monthly rate.

Q3: Why divide by 30 in the formula?
A: This standardizes the calculation to a 30-day month basis, which is commonly used by Indian banks.

Q4: Are there any additional charges beyond this interest?
A: Yes, banks may charge GST on interest, late payment fees, and other penalties depending on the card terms.

Q5: How can I reduce my credit card interest?
A: Paying the full outstanding amount before the due date, making partial payments during the cycle, or transferring balance to lower-rate cards.