Credit Card Calculator - Is it useful?
A credit card calculator is an online tool that helps you to understand how your credit card works and how to get the most out of it or pay it off. A credit card calculator can help you to see in dollars and cents exactly how much it is costing you to carry a balance, or how long it will take to eliminate the balance you have based on what you can afford to pay.
A good website with lots of free, easy to use credit card calculators is www.bankrate.com. If you are currently carrying a balance from month to month and would like to eliminate it, you can find out how long that will take by plugging your interest rate and payment amount at:
http://www.bankrate.com/brm/calc/creditcardpay.asp
Another good calculator shows the real cost of paying the minimum balance only each month. For example, if you carry a balance of $3800 on a credit card with an 18% interest and pay the monthly minimum payment of $95 (and never use the card again!) the calculator shows it will take 286 months, or nearly 24 years, to pay off the card. If instead you pay an extra $25 a month over the minimum, that is, $120 a month, you would pay off the card in 44 month and eliminate your debt. This isn’t what most people would expect. You can plug in your own numbers at:
Another useful calculator lets you estimate your FICO score. A FICO score is what a financial institution uses to decide whether to issue credit to you, how much to issue, and how much interest to charge. The higher your FICO score, the better the terms and interest rate you can get. If your score is less than stellar, you can find out the exact steps you need to take to bring it higher. This particular credit card calculator will also recommend specific credit cards that you might want to consider applying for, based on the information you provide for your estimated FICO score. Check yours out at:
http://www.bankrate.com/brm/fico/calc.asp?lpid=BKRATE29
Motley Fool is a personal finance website that has a wealth of information on every aspect of personal finance you could possibly imagine, and lot of areas you probably have never imagined. Their credit card calculators and debt-reduction strategies are great, and can be found by visiting their credit card page at:
http://www.fool.com/ccc/debt/debt.htm
Credit cards are not necessarily evil, but people do get into trouble with them when they don’t understand how they work. Credit card calculators are a quick and easy-to-understand way of getting to know how your card works and when you need to make changes to preserve your financial health. Often, making a small extra monthly payment and cutting up the card while you pay it down is all it really takes to start to see real results.
Motley Fool offers an excellent list of nine different ideas and methods for getting out of debt at:
http://www.fool.com/ccc/debt/debt03.htm
The advisors at the website are very strong on paying off credit card debt as a first step toward financial health. Many people who change banks over half a percent on their savings account interest maintain credit card debit at an 18, 22, 0r even 29.9% APR. Think of it this way: Paying off a $5000 credit card balance is like earning 18% on a savings account. If you were offered a liquid savings account at 18% you would probably jump on it, and right so.
Credit card calculators can not only motivate you to pay off costly debt, they can show you exactly how to do it and how fast you will be finished. Once you successfully go through that process, you may never be attracted to little pieces of plastic again.
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