1. What is APR?

APR (Annual Percentage Rate) represents the yearly cost of borrowing money, including interest and fees. For credit cards, it's calculated from the daily periodic rate.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( Daily\ Rate \) — Daily periodic rate (decimal form)
• \( 365 \) — Number of days in a year
• \( 100 \) — Conversion to percentage

Explanation: The formula converts the daily interest rate to an annualized percentage rate.

3. Importance of APR Calculation

Details: Understanding APR helps consumers compare credit card offers and understand the true cost of carrying a balance.

4. Using the Calculator

Tips: Enter the daily rate in decimal form (e.g., 0.0005 for 0.05%). The daily rate is typically found in your credit card agreement.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between APR and interest rate?
A: APR includes both the interest rate and any additional fees, providing a more complete picture of borrowing costs.

Q2: What is a good APR for a credit card?
A: As of 2023, average APRs range from 15% to 25%. Rates below 15% are considered good, while rates above 25% are high.

Q3: How do I find my daily rate?
A: Check your credit card agreement or divide your APR by 365 (then divide by 100 to convert to decimal).

Q4: Does APR affect minimum payments?
A: Yes, higher APRs result in higher interest charges, which are included in your minimum payment calculation.

Q5: Can APR change after opening an account?
A: Yes, most credit cards have variable APRs that can change with the prime rate or due to changes in your creditworthiness.