How to Calculate Credit Card Payments & Pay Off
When you have a credit card, you should be aware of what you are being charged and how long it will take you to pay off your balance. If you do not know these figures, you will easily slide into credit card debt as you will not realize the impact of compounded interest and the way your credit card balance can quickly increase. Take time to read your credit card statement and to determine these figures so you stay on top of your credit card situation.
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Instructions
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Check your credit card balance and interest rate. Find out the balance owed on your credit cards and the annual interest rate applied to the balance. Both of these items can be found on your credit card statement, or you can call your credit card's toll-free number to request the information over the phone.
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Determine your monthly minimum payment. Divide your annual percentage rate (APR) by 12 to get your monthly percentage rate and convert that number from a percentage to a decimal. Multiply the decimal figure by your credit card balance to get your monthly interest payment. If this computation seems too difficult, find an online monthly minimum payment calculator such as that provided by Csgnetwork.com (see References).
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Decide what you can afford to pay each month. Although your credit card company will require a minimum payment each month, make a budget and decide whether you can pay more than the minimum payment. Decide on a payment amount that will allow you to pay off the most money without requiring you to use your credit card for monthly expenses.
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Go to Bankrate.com or the AARP.org and enter in the information you have gathered (see Resources). These websites' calculations will total the amount of months it will take for you to pay down your balance.
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Ask for a lower interest rate. Consider calling your credit card company to request a lower interest rate if you are alarmed by the figures you have calculated. If you have made your payments on time, your credit card company will most likely be willing to reduce your APR as it will not want you leaving for another company. With a lower interest rate, you will be able to pay off your credit card debt more easily.
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