Saving money is an art—it sometimes takes a little planning, effort, and creativity to stretch your dollar. One important area this proves true is related to credit cards. Unfortunately, it is all too easy to neglect this aspect of your financial health. One reason for this is a lack of knowledge. At AwardYourMiles, we have created multiple credit card calculators with the specific goal of providing you with education designed to save you money!
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Debt Repayment Calculator
Our Debt Repayment Calculator is designed to educate you on the interest you will pay on a credit card balance based on your interest rate. This knowledge is key—you may unknowingly be paying hundreds, thousands, or tens-of-thousands of dollars of interest on your credit card balance. You can then compare a lower interest rate and learn how much money you would save in interest. Let's look at an example: a $6,000 credit card balance, a 21% interest rate, and a $150 monthly payment amount.
The aforementioned example results in the $6,000 credit card balance being paid off in 70 months and paying $4,410 in interest. Let's now look at an example that has a reduced interest rate of 8%.
A reduced interest rate of 8% results in the balance being paid off in 47 months—23 months sooner—and $1,002 interest versus $4,410—a savings of over $3,400! It is not difficult to see how financially crippling a high-interest rate can be. Seeking out a low-interest rate—or a 0% promotional rate—can remedy this financial issue that has plagued so many people.
One credit card that offers a 0% intro APR for 15 months on purchases and balance transfers is the Chase Freedom Unlimited®. With no annual fee and a welcome bonus offer worth up to $300 cashback or 30,000 Ultimate Rewards® points, this is a great credit card to have in your portfolio. You can learn more about this card in the following post: Chase Freedom Unlimited—Don't Miss Out on This Card! Also, you can apply for this card here!
Our Loan Calculator is designed to provide you with the monthly payment amount needed to pay off your credit card balance within the time period you specify. It also includes the amount of interest you will pay. This knowledge is very useful; you will know when your credit card balance will be paid off. Let's look at an example: an $8,000 credit card balance, a 21% interest rate, and 48 months to pay this balance off.
The aforementioned example results in the $8,000 credit card balance being paid off in 48 months with a monthly payment of $248. Let's now look at an example that reduces the term from 48 months to 24 months.
Reducing the period to pay your $8,000 credit card balance from 48 months to 24 months will save you over $2,000 in interest! Granted, your monthly payment will be $411 as opposed to $248. Nevertheless, this example illustrates the value of paying more in order to save money. You've probably heard the old adage: You can't see the forest for the trees! It basically means looking at the bigger picture. In our credit card scenario, the bigger picture is the total amount of interest you will pay—not the monthly payment amount.
Credit & Credit Card Resources
Do you want to learn more about your credit card score? Find out in the following post: Do You Want a Good Credit Score?
Are you concerned that you will make a mistake if you open up a credit card in your name? Be sure to read the following post: Avoid These Five Mistakes With a Credit Card!
Do you have a bad credit score or have had bad experiences with credit cards in the past? Check out the following post: Steps to Reverse Bad Credit—and Why You Want To.
The Bottom Line
By taking advantage of credit card calculators, you can have more control of your financial health. This can result in saving a lot of money over the course of years—and leads to responsible credit card habits.
It can also open the door to a lucrative way to save even more money—Award Travel! Learn more about this "hidden gem" in the following post: Credit Card Miles & Points—The Secret You Didn't Know About!
At AwardYourMiles, we also have developed other calculators to help you save money. Our Miles & Points Calculator generates a value of the selected credit card in your first and second year of use based on your spending habits. The miles/ points earned will also automatically populate. Our Credit Card Selector Calculator uses our proprietary algorithm to provide you with the first-year value of all our credit cards contained within our database based on your spending habits. Try these out for free!