Credit Card Minimum Payment Calculator
This credit card minimum payment calculator figures how much interest you will end up paying and how long it will take to pay off your credit cards if you make only the minimum required payment. There are a couple of key points to keep in mind...
If you're not sure what your minimum payment is just check the credit card disclosure statement and there should be language similar to "your minimum payment will be 2% of the balance or $10, whichever is higher."
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How Much Interest Will You Pay If You Only Make The Minimum Credit Card Payment?
Making minimum payments on credit cards? It’s time to pay more, and this Credit Card Minimum Payment Calculator provides ample motivation.
Credit card bills show the total amount you owe, and the minimum payment due. Banks offer you two choices – either pay the full amount, or pay only the required minimum amount before the due date. Obviously, you can always pay any amount in between. If you fail to pay at least the minimum amount due, you will be charged late payment fees.
Paying the minimum payment required will result in interest charges, and it will keep debt hanging over your head for years. This minimum payment calculator reveals not only how much interest you will pay, but the total number of payments, number of years until your debt is paid off, foregone interest earnings, and your total estimated opportunity cost.
How Minimum Credit Card Payments Are Applied
Banks apply minimum payments to the balance and interest in a variety of ways. Typically, when making minimum payments, almost all the money goes toward interest incurred and only a tiny fraction goes toward the balance.
Beyond that, any amount you pay over the minimum due is normally applied to the balance with the highest annual percentage rate and then to balances with lower annual percentage rates.
Making minimum payments can ultimately result in paying over double the original balance – especially when you consider the total estimated opportunity cost. Cardholders making minimum payments and actively using their credit cards are very unlikely to pay off their balances.
Quickly Eliminate Credit Card Debt
Below are a number of things you can do to quickly eliminate credit card debt:
Remember: The higher your interest rates and the less you pay every month, the more you’ll end up paying in interest.
Responsible Credit Card Use
Be responsible! Stick to these rules, and you’ll build your credit while avoiding debt:
This minimum credit card payment calculator is a motivational tool designed to steer you away from making minimum payments thus choosing to pay more instead. Making minimum payments has many disadvantages:
Rethink your spending. Don’t fall into the minimum payment trap – be smart and use credit cards responsibly. This credit card minimum payment calculator can only give you the motivation – you have to apply the lessons learned. I hope you do.
Credit Card Minimum Payment Calculator Terms & Definitions
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