A credit card calculator is a calculator that is used to assess the length as well as the interest to pay off your credit card balance. You can find the balance, interest rate, and the minimum payment information from your latest credit card report.
What is a Credit Card?
There is a fundamental difference concerning a Credit Card and a Debit Card. Your bank usually provides you with a debit card when you open a checking account. The card permits you to create payments that are directly deducted from your checking account. Regularly, there is no fee connected with debit card payments.
A Credit Card is a form of unsecured loan, nevertheless, and must be applied for, and, often, paid for with an annual fee. Your bank, or credit card issuer, funds that piece of plastic with a certain amount of credit that you can use at your discretion. You can use up to a certain amount each month, called your limit, and if you spend more, you pay an over-the-limit fee. At the end of the month, you can either pay the entire amount back, or leave an unpaid balance on the card on which you will pay interest. Different cards offer varying rates of interest and the amount of credit you are offered usually depends on your credit rating.
If you already have a credit card, you may make a decision to apply for a new one, and to move the balance on your old card to the new provider – possibly a better rate of interest is offered, or other incentives. Many card providers offer very low introductory rates of interest for balance transfers, but these usually only last for a short time.
Special Credit Cards
Many credit cards also provide associated services. Some provide travel deals and bookings. Other offer cash-back on purchases, or special prices at favoured merchants. Some credit cards made available to the very rich have special perks, like reservations at well-known restaurants, entry to art openings, etc.
It is likely to build up a very large balance of credit on a card by making payments on time for many years. Credit card suppliers will then provide more and more credit each year. But customers must be careful about using the credit on these cards, since the rate of interest can be very high, and servicing the debt can become very expensive. Cards like these very often offer a considerable repayment for normal use.
There are also dedicated credit cards. Some retail stores issue cards that are suitable only at that particular store. Some cards are issued only for specialized uses, to pay business expenses, or to be used when travelling.
There are also special cards for those whose credit rating is too poor to enable them to obtain a normal card. With these cards, the customer must put up a fixed amount of money that is then placed on the card. The customer can then use that sum with the card.
Interest on Credit Cards
If not one is benefiting from a special offer; the interest one pays on a credit card balance is typically quite high. Card providers refer to the interest rate as the annual percentage rate or APR. Some cards have variable APRs, based on specific indexes. Others have fixed APRs with a fixed rate.
Credit card interest charges are calculated on a monthly basis. Since months vary in length, most credit card issuers use a Daily Periodic Rate to calculate interest charges. The Daily Periodic Rate is calculated by dividing the APR by 365. That number is then multiplied by the average daily account balance and by the number of days in the statement billing cycle. Here’s the basic formula:
You should multiply the balance by the Daily Periodic Rate by the number of days in the statement billing cycle to determine the interest for that month’s statement. Our credit card calculator can help.
APRs average at about 20 percent, a very high rate of interest today. The calculation of your monthly payment will lead your provider to charge you a minimum payment, which is almost entirely an interest payment. You must make this payment if you are to keep your credit working. Failure to make the minimum payment will lead to a cancellation of your card, legal proceedings, and a serious loss of credit.
Managing Credit Card Cost
Credit cards offer an immense way to manage your money, but you have to use them carefully. You should be aware of the interest rate on your balance, and, if you increase your balance, be careful about what you will have to pay in the coming months to bring it down.
Always pay more than the minimum payment. Even a few more dollars than the minimum will help to reduce your balance. The minimum is just interest.
It is always possible to withdraw your credit in the form of cash, but you should be very careful about doing this. Cash withdrawals from credit cards are usually burdened with a much higher APR. You will pay much more for your cash than if you use the card to pay for a good or a service.
If you’ve by now been too far along this path, there are steps that you can take. A credit card analyst can work with you to arrange debt consolidation. There are ways for a professional to help you put your debt together so that you pay a lower interest rate and a make a manageable monthly payment. Don’t keep struggling: Seek help, and consult a debt consolidation counsellor.
The Credit Card Calculator enables you to determine your payments, your interest rate, and your projected balance. The Amortization schedule shows you just how long it will take to pay that balance down.