Credit Card Calculator

Credit Card Calculator to calculate monthly payment for your credit card bill. Credit card amortization calculator generates an amortization schedule in excel that shows you how much interest and principal that you are paying each month and exportable as a spreadsheet.

How does a credit card work?

Credit cards offer borrowers a line of credit where they can buy things on credit up to a limit. As soon as the borrower pays off the credit card balance, the limit will be reset. For example, if you are given a credit line of $3,000, and spend $500 this month, the maximum you can still use is $2,500. As soon as you pay off the $500 balance, then the limit is reset to $3,000. Credit cards offer you the convenience of making purchases. Without a credit card, you cannot buy things online. Today's society makes it hard to imagine a life without a credit card.

How do credit card payments work?

Using and making monthly payments on a credit card is a good way to build your credit score. There is a due day for each payment, as long as you are making payments on time, you are building good credit. If you miss a payment or make a late payment, there are late payment fees and interest charges. On top of that, it will affect your credit score in a negative way. You don't have to pay off the whole balance each month, but credit card companies require you to make a minimum payment to reduce your credit card balance. Please keep in mind that just because you can make a minimum payment doesn't mean you should. There are interest charges for the remaining balance, and making minimum payments will never pay off your credit card debt. Even worse, the balance could get out of control if you are a spender.

What is a credit card balance?

There are two balances on your credit card, the statement balance, and the current balance.

• Statement Balance - This shows the total that you owe at the end of the most recent billing period.
  
  
• Current Balance - This shows the statement balance plus whatever amount you spend after the most recent billing period. For example, if your statement balance is $500 for the billing period ending in August, and you spend another $100 in September without paying off the statement balance. Then the current balance would be $600. The current balance keeps track in real-time of how much you owe.

What is the credit card amortization schedule?

Just like a mortgage or a loan, credit cards have an amortization schedule. Unlike a fixed mortgage or loan where the monthly payment is fixed. A credit card amortization schedule is different because you can make minimum payments or more and rack up more spending each month. On top of that, credit cards have variable rates which means your monthly payments will vary each month. There are two components of a credit card amortization schedule, the outstanding balance and the interest payments. A portion of the monthly payment is used to reduce your balance, and the other portion is the interest payments. The interest payments are calculated based on the interest rate of your credit card. The higher it is, the more interest payments you end up making. Our tool uses a simple credit card amortization schedule that shows you how long it will pay off your credit card debt and how much interest you will need to pay on your outstanding balance. It is not possible to create an amortization schedule that would match your monthly spending and the variable interest rate. Only your credit card company can do that.

What happens if I make only the minimum payment on my credit card?

If you are only making minimum payments on your credit card, you will end up with a huge outstanding balance and paying the most interest payments. It may take years to pay your debt and you could be in big trouble if one day you cannot no longer afford the minimum payments. Your minimum payment increases every month when you keep spending and not paying off your debt. Credit card debt can snowball if you are not careful and it may ruin your credit score and financial life.

What happens if I overpay my credit card?

While there is no penalty for overpaying your credit card, there is no benefit either. When you overpay your credit card, you will have a negative balance for the month and it will be used to deduct from your next month's credit card bill.

How much of my credit limit should I use?

Just because there is a limit to how much you can use on a credit card doesn't mean you should spend the maximum amount. When your credit usage is too high, it hurts your credit score. In general, you should not use more than 30% of your credit limit. For example, if you are given a limit of $5,000 for a credit card, you should keep your balance lower than $1,500 (30% of $5,000). When your credit usage goes above 30%, it lowers your credit score. If you have multiple credit cards, not only should you keep each credit card usage under 30%, the total outstanding balance of all your credits should not exceed 30% of the total credit limits. For example, if you have 3 credit cards, each with a $5,000 limit for a total limit of $15,000. The total balance on all 3 credit cards should not exceed $4,500 (30% of $15,000). It is important to maintain a good credit score as it will save you thousands of dollars in interest payments if you ever need to apply for a loan or buy a house on a mortgage. Borrowers with good credit scores will get the most competitive interest rate from lenders.

How to pay off credit card debt?

Credit card is like a double-edged sword, it is convenient but also risky. When it is used properly, you can build your credit score and credit history. However, for people with spending problems, credit card debt can get out of control. Many people found their credit card bills piling up and there is no way out. They can't afford to make minimum payments because credit cards have very high APRs (18% - 30%). Not only do they need to pay off their balances, but they also need to make very high-interest payments. Some people are forced to default on their credit cards. Not only do they have to deal with debt collectors, but also ruin their credit scores. Here are some tips on how to pay off your credit card if your balance is high.

• Cut Spending - Cutting on spending and saving more money is really the only permanent solution for people who have  a high credit card balance and can't pay it off.
  
  
• Use Cash - Cut your credit card and use only cash. This will force you to spend only on necessities instead of luxuries. You can always ask your credit card company to issue you a new card after you pay off your credit cards.
  
  
• Balance Transfer - Many credit cards have a 0% or very low APR for the first year. If you qualify for these cards, do a balance transfer to pay off your credit cards with high APR. Hide the new credit card so that you don't run up the bills on your new card.
  
  
• Debt Consolidation Loan - Consider taking out a debt consolidation loan or a personal loan to pay off your credit cards. Make sure the loan has a lower interest rate than the credit cards you have. You should talk to the lender and review the terms. Make sure the debt consolidation loan has a lower interest rate and overall costs than the APRs on your credit card debt. Check for any fees or penalties involved with paying off the loan early.
  
  
• Avalanche Method - Pay off the credit card with the highest APR first, and then move on to the credit card with the second highest APR until you pay off the balance on all of the credit cards.
  
  
• Snowball Method - Start paying off the credit card with the smallest balance and make minimum payments on the other ones. The credit card with the smallest amount is the easiest to pay off. Once you pay off one credit card, it gives you the momentum to pay off the others. After you pay off the first credit card, start paying off the credit card with the second smallest balance until all the cards are paid off.

Using the avalanche method will save you the most money while the snowball method might give you the motivation to pay off your credit card balances. You will need to see which method works better for you.

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