Credit Card Calculators: What is a Credit Card Calculator and What is it For?
How a good credit card calculator can help you budget your expenses
Credit cards are the backbone of the American consumer economy, and increasingly the world economy, as far as consumer purchases go. Today the world over people use this little plastic card engraved with numbers for day to day as well as long term purchases.
Credit cards are, of course, issued by the banks or financial institutions who are then considered the lenders. It’s important to understand this, as many people spend liberally on credit cards and don’t seem to realize that they are, in essence, borrowing money, taking loans. It’s not your money. And with the interest rates that many credit card companies are charging nowadays, it’s not much better than borrowing cash from a street alley loan shark.
American lenders are as devious as they come, and on the pretext of lending money they induce you to spend much more than is good for you. Interest is charged on the purchase if the balance accrues beyond one month. Unfortunately, many credit card users make the minimum monthly payments, thinking that’s all that’s required. While technically true, can one actually pay off a credit card (especially one that’s in continuing use) by making the minimum monthly payments? (the answer is no).
All credit cards have a credit limit. The credit limit is determined by the lender depending on an individual’s credit score. Fico is the most popular credit scoring system in the USA. Depending upon the income and expenditure and past financial history of an individual the credit score is determined. Utility bill payments like electricity bills and telephone bills paid on time without any default enhance one’s credit worthiness and financial credibility.
A decade ago you had to knock on the lender’s door, hat in hand (figuratively speaking) to learn your credit score. Not anymore. There are many online services where you can get that information.
Always keeping track of your credit card balance, your spending limit and your interest charges is just the first step. One tool that can help you figure out just how much you are paying in interest charges, and how long it will take you to pay off your credit card depending on the size of your payments, is a credit card calculator.
What is a Credit Card Calculator?
This calculator is designed to show you how long it will take to pay off your credit card and how much interest you will pay if you only make the minimum monthly payment. For this reason, it’s also called a credit card interest calculator, or a credit card payment calculator.
A credit card calculator will help you determine how long it will take to pay off your credit card balance. Simply enter in the balance on your card and Interest Rate (APR), then either choose a Minimum Payment or enter a Monthly Payment of any amount you like. All this can be done online, and generally free of charge.
Once you know your credit limit keep a check on your purchases so that you don’t exceed your budget and fall into debt. Getting over your head in credit card debt can be terrifying. Use credit card calculators to find how much you owe each month in interest and principal so that you can budget your monthly expenses accordingly.
An Excellent Online Credit Card Calculator
I have Java and ActiveX controls disabled on my computer for security purposes. I had a hard time finding websites with free credit card calculators that do not require the use of those programs. BankRate.com, for example, which has a ton of free calculators, will not work with my chosen settings.
After several dead ends, I discovered CNNMoney.com’s credit calculators. CNNMoney has one of the nicest credit card debt calculators I’ve seen. You can enter several different credit cards (giving each one whatever name you like), and for each one you type in the balance, the interest rate and the minimum monthly payment. Second, you choose to calculate based either on the minimum monthly payment, or on a fixed payment amount that you can make every month. Click “calculate”, and the calculator will tell you exactly how long it will take you to become debt free making the monthly payment amount that you’ve chosen, and how much of that total will have been interest. The answer might shock you.
Alternatively, you can tell the credit calculator that you want to be debt free in a certain length of time, say in two years, and the calculator will tell you how much you must pay every month to achieve that goal. A very handy little tool, and free to boot!
Controlling Your Credit Card Spending
The importance of keeping a check on credit card expenses cannot be overemphasized. There are some people who go overboard with their shopping just because they have a credit card in hand. It is only at the end of the month when they have to pay the credit card bills that reality bites. If these people finally land in a debt trap it would not be anyone’s mistake but their own. A credit card has to be used judiciously. In fact, just as a vehicle has a speed limit, there should be a spending limit which one should impose on oneself. This is the only way to keep yourself from going on a Christmas time spending spree, or using your credit card to fund some business expenses or necessary home expenses, then suddenly finding yourself up debt creek without a paddle.
Use a credit card calculator and keep within your spend limits. Obeying the limit you set for yourself is the best way to remain within your credit card budget.