Why Use a Credit Card Repayment Calculator?
A credit card repayment calculator is designed to show you precisely how much interest you’ll pay and exactly how long it will take you to repay your credit card balance based on the payments you make right now.
You can also use a credit card repayment calculator to work out exactly how much more than the minimum payment you should be paying in order to pay off your debts quicker.
How to Use a Credit Card Repayment Calculator
Most credit card repayment calculators are designed to let you input how much you owe, how much you pay on your interest rate and what your current minimum payment is.
Spend a little time entering your current credit card balance figures and see if you can find out how much interest you’re charged right now. The calculator will figure out how much you’ll end up paying in interest costs and how long it will take you to pay off your debt at the rate you’re going now.
As an example, if you have a $2,000 credit card balance right now and you’re being charged 18.74% in interest with a current minimum payment of $65 per month, a calculator will show you that it will take you more than 3 ¬? years to repay your debt. You’ll also pay $747.22 in interest costs over that time.
43 months is a very long time to pay off $2,000, but this could be because the minimum payment you make each month is only a little more than the amount of interest charged.
Add an Extra Payment
Now figure out how much extra you can afford to pay each month on top of the minimum payment due. If you enter $50 extra, your new monthly repayment will be $115 per month.
$50 a month might sound like a stretch if you’re already struggling to make ends meet. However, that extra $12.50 per week can reduce the total interest you pay by more than half. You’ll be paying only $352.02 over the term and it should only take you 21 months to repay your debt.
Reduce the Interest Charges
Spend a little time looking around at credit card offers and find one with a lower interest rate than you’re paying now. Add this lower interest rate into the credit card repayment calculator and see what it does to your repayments and the amount of interest you’ll pay.
For example, assume you have the same $2,000 outstanding debt, but your interest rate is reduced down to a 3.99% balance transfer rate for the life of the loan. You should still leave an extra $50 per month extra payment on top of the minimum payment due.
The results on your credit card repayment calculator will show you that you’ll reduce the amount of interest you pay right down to $63.59 and it should only take you 18 months to repay your debt completely.
