Credit Card Calculators

Credit cards are a good way to manage spending

. Comprehensive statements makes it possible to keep track of every purchase, and simple-to-use credit card calculators make working out the rate of repayment straightforward.

How can a credit card calculator help me?

Using credit prudently often comes down to balancing the benefits of an extended repayment time with the cost-effectiveness of making repayments quickly. This might sound complicated, but it is really quite simple: The sooner you settle your credit card account, the less interest you will pay. On the other hand, it may be more practical and convenient to make smaller payments over a longer period of time.

A credit card calculator makes it easy to determine the benefits and costs of each approach.

This is clearly illustrated by a hypothetical example. Suppose you owe R5000 at an interest rate of 17%. If you want to repay this amount within six months, you will have to pay at least R875.14 each month. If you were to pay the minimum repayment each month, the total amount paid after six months would be R5166.

If you would prefer to repay the amount over 12 months, the minimum monthly repayment will be R456.02. This is a considerably lower monthly amount, but the total paid at the end of the term will be R5472.24.

A credit card calculator makes the computation easy by doing the maths for you. Simply enter the total amount owed and your credit cards interest rate and specify the number of months in which you would like to settle the amount. The calculator will then display the minimum sum you will have to pay each month to repay that amount within the specified time.

Calculating time

Some credit card calculators also let you input the amount you wish to repay each month in order to settle your account, and compute how long repayment will take. If you know it is convenient to pay a certain amount each month, the calculator will work out how long repayment will take. The more you are able to repay each month, the quicker you will settle your credit card account and the less interest you will ultimately pay.

Note that the above calculations assume you do not take on additional debt during the repayment period. If you make further purchases before settling your account in full, you will have to recalculate the applicable amounts.

Managing debt responsibly

Credit cards extend a considerable amount of financial leeway. As with any kind of credit, it is important to use this flexibility responsibly.

Credit card calculators make clear the amount of money you will need to pay and the length of time you will have to do it in. If you experience difficulties meeting these payments, do not ignore the problem. As the above calculations demonstrate, neglecting to meet payments over a long period of time can prove costly and, and failing to make payments will harm your credit rating.

If you are experiencing any difficulties repaying debt, speak to your bank straight away. They will be happy work out the most cost-effective programme of repayment before the problem becomes too serious. Best yet, however, is to use a credit card calculator to manage responsible monthly payments, so you can enjoy all the benefits of credit without any drawbacks.

by: AlterSage

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