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The Best Credit Card Debt Calculator

10:00 AM March 20, 2020

Most people use credit cards as a staple for purchasing expensive products and services. However, as people use them, they may build a huge credit card balance and accrue too much debt. Multiple debts can become disheartening as debts such as credit cards and auto loans pile up.

Luckily, a credit card debt calculator can show you how fast you can actually pay your credit card debt. This can help you plan on decreasing credit card debt by showing you how much you need to pay for how many months.

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How To Use Credit Card Debt Payoff Calculator

credit card debt calculator

An online debt repayment calculator will require your name on the account and your balance gained from various debts. Then, you need to include your interest rates and minimum monthly payments found on your statements.

You may then adjust your monthly payments and choose various payment strategies. This will show the differences in your interest, total cost, and eventual debt-free date. You may also include additional data such as your medical expenses and student loans to receive a more detailed analysis.

There are other features that may help in your credit card payments. You may drag the calculator’s sliding scale to adjust the amount you’ll dedicate to your debt. In addition, you may choose a payoff order that will be taken into account: the debt snowball or the debt avalanche.

Can you find spare cash toward your debt payments?

Make a budget to determine whether you have extra money to add to the minimum payments. That money will accelerate your debt payoff. Adjust the sliding scale matching how much extra money you’ll put toward your debt.

How To Calculate Credit Card Interest Rate

debt interest rate

Your bank will determine the interest rate of your credit card. They are classified into three types: variable, fixed, and promotional. Variable rates are determined by various benchmarks that include prime interest rate, US Treasury Bill interest, and many other indexes. Additionally, you will have to pay a ‘margin’ to the bank, an amount based on your credit rating.

Fixed rates, as the name suggests, do not fluctuate like variable rates. These are larger than variable rates though. A card issuer may change it after a 45-day notice, but the cardholder may refuse the new rate. Also, the rate may change if you paid late, completed a debt management program, or exhausted your promotional fixed rate’s duration.

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How the Debt Snowball Calculator Will Make You Debt Free

Promotional rates are available during a limited-time promotion. These can be quite advantageous in certain situations. However, you must read the fine print carefully and expect a lower credit score due to risk to lenders.

If you want to know how much your rate will cost, look for your card’s annual percentage rate and divide it by 365 days. This is your daily periodic rate. Then, add all your card purchases and divide them by your credit card’s billing period. The result is your average daily balance.

Next, multiply your daily periodic rate and your average daily balance. Finally, multiply that by the number of days in your billing cycle to get your interest balance.

How To Pay Off Debt Sooner

how to pay debt sooner

Determine your debt-to-income ratio to find out the best way to manage your credit card debt:

If your DTI is less than 15%

You may use the debt avalanche method to quickly get rid of your debts by starting with the larger ones. This is a thrifty but daunting technique since you won’t feel any progress immediately. On the other hand, paying off your smaller debts using the debt snowball method can motivate you to continue with your debt payment plans.

If your DTI is between 15% to 39%

You may use financial tools like a credit card debt calculator to help with debt management.

If your DTI is 0%

You may transfer your balance to another credit card in order to pay it off without interest. Also, you may ask a bank for a personal loan with lower interest to deal with your debt. Finally, you may consult with a nonprofit credit counseling company to discuss a debt management plan.

If your DTI is more than 40%

You may discuss with your bank to grant you debt relief. The bank may agree to lower your interest rates, waive your fees, or both. Take note that you will have to sacrifice your other financial goals as you will need to focus intently on paying off your debt once you get relief.

Summary

You can pay your debt faster and manage your finances by using a debt payoff calculator.

While this calculator can help you chart a debt repayment plan, it won’t hurt to set aside extra cash to go to your monthly payments.

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TAGS: Credit Card Debt, USFINANCE
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