Tips for Using a Credit Card Repayment Calculator
The minimum payment for credit card debts is calculated based on a percentage of your entire current balance. Issuers of credit cards also typically set a limit for the minimum. While your minimum payment may drop as you pay your balance, thanks to compounding interest, you will likely pay on your card for a very long time if you choose to pay the minimum payment. When you carry a large, fluctuating balance on your credit card, figuring the minimum payment may feel like a guessing game. Often times, however, determining your minimum payment can be made easier by using a credit card repayment calculator.
Where to Find Your Credit Card’s Minimum
You should be able to find how your card issuer calculates their minimum payments in the cardholder agreement. This should have been included in a pamphlet you received with your card. If you did not hang on to that, you should be able to log into your account online and view the details of your card. As a last resort, call the customer service number on the back of your card and a customer service representative can inform you of the details.
The law requires credit card issuers to include a “Minimum Payment Warning” in the pamphlet. This will disclose how long it would take to pay off your credit card debt if you were to pay only the minimum payment every month.
Pay More Than the Minimum Due
While it may seem like you are saving more money by paying the minimum payment due because your checking account balance takes a smaller hit, even though you are paying less up front, you will pay more in the long run. So, if you are running low on cash, just how much should you pay toward your balance each month?
Many experts will recommend that you pay at least double the minimum payment amount, but if you are already struggling financially, that may not be an option. If that is the case, even paying an extra $10 or $20 per month will help. You may also be able to request a lower interest rate from your card issuer or move high-interest credit card debt to a card with a lower interest rate.
What is Wrong with the Minimum Payment?
If you use a credit card repayment calculator, you will be able to see exactly what is wrong with paying only the minimum payment required by the card issuer. While paying the minimum amount may seem like a good idea, it is really only a good idea for the issuer and not you. With the way compound interest works, your credit card issuer will make significantly more profit off of your interest rate, and out of your pocket, than they would if you paid down your balance faster.
Contact an Experienced Attorney Today
If you are struggling to pay your minimum payments or have questions about how to handle your debts, the attorneys at Cornwell Law Firm can help. We have years of experience helping our clients get back on their feet financially. Contact us today to schedule a consultation.