Interest Calculations
Published
10/28/2009
How to calculate credit card interest. Use our online free calculators, or download calculator software to your computer for offline use.
Which costs less interest? A credit card with a $10,000 balance but only a 11% interest rate, or a credit card with only a $5,000 balance but a 22% interest rate?
Before you can determine which situation would cost the less in interest payments, first we need to know how much money per month you'll be paying. Lets assume you'll be making $300 monthly payments. Here are the results:
*With a credit card that has a $10,000 balance @ 11% interest, and making $300 monthly payments, the total interest charged would be $1,988.44
*With a credit card that has half the balance ($5,000) but twice the interest rate (22%), the total interest charged would be $1,021.60
As you can see, not only does the principal balance impact total debt repayed, but the interest rate can cause a huge variation.
Let's look at another credit card interest example:
Which would cost less interest? Making a $500 monthly payment on a credit card with a $10,000 balance and a 14% interest rate, or making a $300 monthly payment on a credit card with a $5,000 balance and a 24% interest rate:
With a credit card that has a $10,000 balance at 14% interest with $500 monthly payments, it would take 23 months to payoff the balance, with a total debt of $11,453.82, of which $1,453.82 is interest alone.
With a credit card that has a $5,000 balance at 24% interest with $300 monthly payments, it would take 21 months to payoff the balance, with a total debt of $6,143.34, of which $1,143.34 is interest alone.
As you can see by this example, the credit card with a $10,000 balance will cost you more interest, although you're making nearly twice the monthly payment and the interest rate is nearly half that of the other credit card with only a $5,000 balance, a 24% interest rate and monthly payments of only $300.
By knowing which credit cards will cost you the most money, you'll be able to make better decisions about which one to payoff first.
And you can do these same calculations; and more, super easy and free by using our financial calculators. You can use them online on our website, or you can download your own personal copies to your computer so you can use them even while you are offline.
Our financial calculators are at
www.creditfederal.com/financial-calculators.html
