How a credit card payment calculator works

What you need to know about credit card payment calculator

14:48 20 February 2014

There are a lot of credit card payment calculators online that can be used to calculate the amount of money one has to pay to get out of credit card debt. However, in calculating your credit card payment, you need to factor your ability to pay off the debt within the estimated time period.  If you have more than one card, each card will have a different interest rate. The best thing you can do if this is the case is to find a way to consolidate your debt. With debt consolidation, you will not have to contend with varying interest rates. 

 

To get a general idea of how a credit card payment calculator works, or how it can deduce the time one will have to take to pay off a debt, be mindful of the following:

 

• The monthly payments can be as low as 1% of the credit balance. Paying off a debt at this rate can take a while. Most banks will include the number of months it will take you to pay back your debt on your monthly bill. 

 

• When using the credit card payment calculator be realistic about how much more you can actually afford to add on to the minimum payment. If you are struggling with the minimum repayments then you clearly have a bigger problem whose answer cannot be worked out without involving the credit card company. 

 

• In order to work out if you can afford credit card repayments you need to first work out a budget. If it becomes apparent that you may need to get your debt restructured so that you can pay something on the credit card, then you need to get a financial counsellor or go into credit counselling to get help with consolidating, negotiating reduced payments and freezing of interest so that you can begin to take control of your financial situation. 

 

There are so many of these calculators that it becomes hard to tell which one is the best, unless you have been exposed to the calculation process.