1. What is Credit Card Interest Calculation?

Credit card interest calculation determines how much interest you'll pay on your outstanding credit card balance. In Singapore, this is typically calculated using the average daily balance method, which considers your balance each day of the billing cycle.

2. How Does the Calculator Work?

The calculator uses the credit card interest formula:

Where:

• \( ADB \) — Average Daily Balance (SGD)
• \( R \) — Monthly Interest Rate (%)
• \( D \) — Number of Days in Billing Cycle (typically 30)

Explanation: The formula calculates interest based on your average daily balance, applied interest rate, and the number of days in your billing cycle, divided by the standard 30-day month basis.

3. Importance of Credit Card Interest Calculation

Details: Understanding how credit card interest is calculated helps consumers make informed financial decisions, manage debt effectively, and avoid unnecessary interest charges by paying balances on time.

4. Using the Calculator

Tips: Enter your average daily balance in SGD, the monthly interest rate as a percentage, and the number of days in your 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 your daily balances divided by the number of days in the billing cycle. It accounts for fluctuations in your balance throughout the month.

Q2: How is the monthly interest rate determined?
A: Credit card companies in Singapore typically charge between 2% to 2.5% per month (24% to 30% annually) on outstanding balances.

Q3: Why divide by 30 in the formula?
A: The division by 30 converts the monthly calculation to a daily basis, then multiplies by the actual number of days in your billing cycle.

Q4: When is credit card interest charged?
A: Interest is charged when you don't pay your full outstanding balance by the payment due date each month.

Q5: How can I avoid paying credit card interest?
A: Pay your full outstanding balance by the payment due date each month. Most banks in Singapore offer interest-free periods if you settle your balance in full.