Interest Calculator Credit Card Philippines

Credit Card Interest Formula:

\[ I = \frac{ADB \times R \times D}{100 \times 30} \]

Calculated Interest (I):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Credit Card Interest Calculation?

Credit card interest calculation determines the finance charges applied to outstanding balances. In the Philippines, this is typically calculated using the average daily balance method with the formula: I = (ADB × R × D) / (100 × 30).

2. How Does the Calculator Work?

The calculator uses the credit card interest formula:

\[ I = \frac{ADB \times R \times D}{100 \times 30} \]

Where:

\( ADB \) — Average Daily Balance (PHP)
\( R \) — Monthly Interest Rate (%)
\( D \) — Number of Days in Billing Cycle
\( I \) — Calculated Interest (PHP)

Explanation: This formula calculates the interest charges based on your average daily balance, the applicable interest rate, and the number of days in the billing cycle.

3. Importance of Interest Calculation

Details: Understanding how credit card interest is calculated helps consumers manage their finances better, avoid unnecessary charges, and make informed decisions about credit card usage.

4. Using the Calculator

Tips: Enter your average daily balance in PHP, 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's the most common method used by Philippine banks.

Q2: How is the monthly interest rate determined?
A: The interest rate is set by your credit card issuer and is typically expressed as a monthly percentage rate. Check your cardholder agreement for specific rates.

Q3: Why divide by 100 and 30 in the formula?
A: Dividing by 100 converts the percentage rate to a decimal, and dividing by 30 adjusts the monthly rate to a daily rate for the actual days in the billing cycle.

Q4: Are there other fees besides interest?
A: Yes, credit cards may also charge late payment fees, annual fees, and other service charges in addition to interest.

Q5: How can I reduce my credit card interest?
A: Pay your balance in full each month, make payments on time, and consider balance transfer options with lower interest rates.