1. What is Credit Card Interest Calculation?

Credit card interest calculation in Malaysia follows the formula: Interest = ADB × (R/100/365) × D, where ADB is the average daily balance, R is the annual interest rate, and D is the number of days in the billing cycle.

2. How Does the Calculator Work?

The calculator uses the standard interest formula:

Where:

• \( ADB \) — Average Daily Balance (RM)
• \( R \) — Annual Interest Rate (%)
• \( D \) — Number of Days in billing cycle

Explanation: The formula calculates daily interest by converting the annual rate to a daily rate, then multiplies by the average balance and number of days.

3. Importance of Interest Calculation

Details: Understanding credit card interest helps consumers manage debt effectively, avoid excessive charges, and make informed financial decisions.

4. Using the Calculator

Tips: Enter average daily balance in RM, annual interest rate in percentage, and number of days in the billing cycle. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is average daily balance calculated?
A: ADB is calculated by summing the outstanding balance for each day in the billing cycle and dividing by the number of days.

Q2: What is the typical credit card interest rate in Malaysia?
A: Most Malaysian credit cards have annual interest rates between 15-18%, but this can vary by bank and card type.

Q3: Are there any exemptions from interest charges?
A: Most banks offer interest-free periods if you pay your full statement balance by the due date each month.

Q4: How can I reduce my credit card interest?
A: Paying more than the minimum payment, paying on time, and transferring balances to lower-rate cards can help reduce interest.

Q5: Is this calculation method specific to Malaysia?
A: Yes, this formula follows the standard method used by Malaysian banks for credit card interest calculation.