1. What is Credit Card Interest Calculation?

The credit card interest calculation estimates the interest charged on outstanding credit card balances using the average daily balance method. This calculator is specifically designed for FNB (First National Bank) credit cards in South Africa.

2. How Does the Calculator Work?

The calculator uses the interest calculation formula:

Where:

• \( ADB \) — Average Daily Balance (ZAR)
• \( R \) — 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 and multiplying by the average balance and number of days.

3. Importance of Interest Calculation

Details: Understanding credit card interest helps consumers manage debt effectively, make informed financial decisions, and avoid unnecessary interest charges by paying balances in full each month.

4. Using the Calculator

Tips: Enter your average daily balance in ZAR, the annual interest rate percentage, and the number of days in your billing cycle. All 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 daily interest rate calculated?
A: The annual rate is divided by 365 days to get the daily interest rate.

Q3: Does FNB use this calculation method?
A: Yes, FNB and most South African banks use the average daily balance method for credit card interest calculations.

Q4: When is interest charged on credit cards?
A: Interest is typically charged when you carry a balance past the payment due date or use cash advances.

Q5: How can I avoid paying interest?
A: Pay your full statement balance by the due date each month to avoid interest charges on purchases.