What Is It?
A Credit card calculator helps you make an informed decision as to whether a credit card loan will help your take charge of your debts. It also helps you understand the terms of a loan that is best for you and your particular situation.
How does it work?
A Credit card calculator requires you to punch in all of your various credit card balances, the interest rates and monthly payments. Then, when you can see what your total debt is, you create a model of a single, consolidated loan. This means that you juggle three factors: an interest rate, monthly payment and loan term. The Credit Card Calculator helps you quickly create the profile of a single, consolidated loan that will lower than the sum total of all your monthly payments while reducing your interest rate and paying off the loan in a reasonable period of time.
Here's An Example
Let's say you have 4 credit cards with the following characteristics:
- Balance of $5000 with an interest rate of 19.00% and a monthly payment of $200.
- Balance of $4000 with an interest rate of 18.50% and a payment of $160.
- Balance of $3000 with an interest rate of 19.25% and a payment of $120.
- Balance of $2000 with an interest rate of 16.50% and a payment of $80.
Together, the Credit Card Calculator tells you:
- You have a balance of $14,000 at 18.55% with a monthly payment of $560.
- It will take you just under 13 years to pay off the cards
- You'll shell out $8500 in interest.
And you're juggling 4 monthly bills to do it.
But what if you could consolidate the balances, making a single payment each month -- at a lower interest rate? Paying lower interest rates can result in paying lower monthly payments and/or paying off the loan sooner. The math can be tricky -- but a Credit Card Calculator can help you figure it out in a snap.
In this example, our Credit Card Calculator tells you that, at 12.3%, you could do a single monthly payment of $560 and pay off the loan in just over 13 years. Your total interest paid would be a bit over $4700. That's a savings of $3800.
Or you could reduce your monthly payment to $455, paying off the loan in 17 years with an interest charge of $6400. You'd save $2,100 in interest and $105 per month to your bottom line. And again, you have a single payment to manage. That's also a better deal...and a Credit Card Calculator helped you get the answer in just a few seconds.
Conclusion
You have to decide which deal is best for you. And there is no guarantee that you can get the loan you want. You still need to qualify for the loan. This usually means that you need to own a house or some asset, which can be used as collateral to obtain the consolidation loan. And you personal credit history needs to be good. That said, you can come out way ahead with a loan if you know how to make an informed decision about the terms that are best for you.A Credit Card Calculator can do that for you.
