1. What is the Kotak Credit Card Loan Interest Calculation?

The Kotak Credit Card Loan Interest Calculation determines the monthly interest payable on an outstanding credit card balance using the annual interest rate converted to a monthly rate.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( I \) — Monthly interest (₹)
• \( P \) — Outstanding balance (₹)
• \( r \) — Annual interest rate (decimal)

Explanation: The formula converts the annual interest rate to a monthly rate by dividing by 12, then multiplies by the outstanding balance to calculate the monthly interest amount.

3. Importance of Interest Calculation

Details: Understanding monthly interest charges helps cardholders manage their debt, make informed repayment decisions, and avoid accumulating excessive interest over time.

4. Using the Calculator

Tips: Enter the outstanding balance in rupees and the annual interest rate as a percentage. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How often is credit card interest calculated?
A: Credit card interest is typically calculated monthly based on the average daily balance and annual percentage rate.

Q2: What factors affect credit card interest rates?
A: Interest rates depend on the card type, creditworthiness of the cardholder, market conditions, and the bank's policies.

Q3: How can I reduce my credit card interest payments?
A: Paying more than the minimum amount due, making payments on time, and transferring balances to lower-rate cards can reduce interest costs.

Q4: Are there different interest rates for purchases and cash advances?
A: Yes, cash advances typically have higher interest rates and may incur additional fees compared to regular purchases.

Q5: How is the annual percentage rate (APR) different from the interest rate?
A: APR includes both the interest rate and any additional fees, providing a more comprehensive measure of borrowing costs.