How To Calculate Credit Card Interest
Need to know how to calculate credit card interest? The interest rate of a credit card is different from its annual percentage rate. Knowing the APR of a credit card does not mean you will have access to its interest rate. In order to calculate the interest rate of a credit card, you need to know how to solve simple math calculations so that you can obtain the right results. If you really want to calculate credit card interest, you must make sure that your fundamental math skills are highly accurate. Here are some details on calculating credit card interest.
If you want to calculate your credit card's interest rate, you need certain important information. You should know how much money you want to borrow. If you want to calculate interest on a credit card, all you have to do is find out how much money your bank is willing to disburse to your credit card account. Borrowing $20 thousand from a bank in the United States and knowing that you will have to pay $590 as interest annually will enable you to perform some good calculations.
- Divide the annual interest amount by the funds you are borrowing. By following this formula, you will be able to calculate your credit card's interest rate. By observing the details above, when 590 is divided by 20,000, the result is 0.0295, or 2.95%. This is because the decimal figure of 0.0295 is multiplied by 100 to convert it to a percentage. You will not be able to calculate credit card interest until you are familiar with the formula "i = I/P," in which i is the APR, I is the dollar amount of interest paid and P is the amount borrowed. It's fairly easy to calculate the interest rate on a credit card when using the aforementioned common formula.