📚 How to calculate credit card interest when the interest is compounded

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These days, most credit cards compound interest on a daily basis, not monthly.

Q1. A credit card company charges an interest rate of 19% per year, compounded daily. How much interest would be charged on an overdue balance of $1200, 40 days after the due date?

Q2. The Study Force credit card company charges an interest rate of 9% per year, compounded daily. How much interest would be charged on a balance of $600 after 3 days from the due date?

A=P(1+i)^n

Where:

A=amount or future amount
P=principal (amount invested)
i=interest rate (decimal)
n=number of compounding periods