1. What is the BPI Credit Card Interest Calculation?

The BPI Credit Card Interest Calculation determines the monthly interest charged on outstanding credit card balances. It uses the average daily balance method and applies the monthly interest rate to calculate the interest amount.

2. How Does the Calculator Work?

The calculator uses the BPI interest formula:

Where:

• \( I \) — Interest amount (currency)
• \( ADB \) — Average Daily Balance (currency)
• \( r \) — Annual interest rate (decimal)

Explanation: The formula calculates monthly interest by dividing the annual rate by 12 and multiplying it by the average daily balance.

3. Importance of Interest Calculation

Details: Understanding credit card interest calculations helps cardholders manage their finances better, avoid unnecessary charges, and make informed decisions about debt repayment.

4. Using the Calculator

Tips: Enter the average daily balance in currency units and the annual interest rate as a decimal (e.g., 0.18 for 18%). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is Average Daily Balance (ADB)?
A: ADB is the sum of each day's balance divided by the number of days in the billing cycle.

Q2: How is the annual interest rate converted to monthly?
A: The annual rate is divided by 12 to get the monthly interest rate.

Q3: Are there other fees included in credit card charges?
A: Yes, credit card charges may include late payment fees, annual fees, and other service charges in addition to interest.

Q4: Does BPI use this calculation for all credit cards?
A: While this is the standard calculation, specific terms may vary by card type and promotional offers. Always check your cardholder agreement.

Q5: How can I reduce my credit card interest?
A: Paying your balance in full each month, making payments on time, and maintaining a lower balance can help reduce interest charges.