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Interest Formula:
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Credit card interest calculation in the Philippines 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.
The calculator uses the standard interest formula:
Where:
Explanation: The formula calculates the interest charged on your credit card balance based on the average daily balance, annual interest rate converted to daily rate, and the number of days in the billing cycle.
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.
Tips: Enter your average daily balance in PHP, annual interest rate in percentage, and the number of days in your billing cycle. All values must be positive numbers.
Q1: How is average daily balance calculated?
A: ADB is calculated by adding up the daily balances for each day in the billing cycle and dividing by the number of days in the cycle.
Q2: What is the typical interest rate in the Philippines?
A: Credit card interest rates in the Philippines typically range from 2% to 3.5% per month, which translates to 24% to 42% annually.
Q3: Are there other charges besides interest?
A: Yes, credit cards may also charge late payment fees, over-limit fees, and other service charges in addition to interest.
Q4: How can I avoid paying interest?
A: Pay your statement balance in full by the due date each month to avoid interest charges on purchases.
Q5: Is this calculation method specific to Philippine banks?
A: Yes, this calculation method follows the standard practice used by most banks in the Philippines for credit card interest computation.