How to Calculate a Biweekly Credit Card Payoff
Credit cards are big business for the financial institutions that issue them. Most credit card holders spend a significant amount in annual interest fees from a low introductory rate to 30 percent. It's no wonder that many people's financial goals include paying off their credit card balance quickly because the faster you pay it off the less interest is applied. Here's how you can calculate a bi-weekly credit card payoff without being a mathematician.
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Instructions
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Instructions
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Locate your credit card information, including the current balance and interest rate. If applicable, add any pending purchases that have not been posted to your current balance yet. This information is required to calculate a biweekly credit card payoff.
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Do an Internet search to find an online financial calculator that will calculate credit card payoffs. Avoid subscribing to paid tools like Financial Toolkit. Online calculators like the ones found on Bankrate.com or the website for the Philadelphia Federal Credit Union can be accessed easily for free.
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Contact your credit card provider to inquire about any interest rate changes to your account. According to the Controller of the Currency Administrator of National Banks, banks are entitled to increase interest rates as part of a change in the agreement terms or as a result of late payments if they give 45 days' advance notice.
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Divide 26 weeks by 4 to calculate how long a biweekly payoff would equal in months over the course of a year. Your answer will be 6.5 months. This calculation is necessary because most financial calculators determine credit card payoffs according to months because interest is accumulated on a monthly basis.
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Plug in your current balance, interest rate and payoff goal in months. If separate fields are not provided to capture an applicable annual fee, major purchases you plan to make or over-limit fees, add these amounts to your current balance. Include the new payment amount in your personal budget.
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Set up automatic payments from your checking account on a biweekly basis. You also can make manual payments through the ATM or through a bank account that permits internet or telephone banking. Ensure that payments are made before the due date to avoid additional interest charges.
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Suspend all use of the credit card you are paying off. Any new charges will affect your calculations for the biweekly payoff because they increase the account balance.
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Call or visit the financial institution that issued you the credit card to confirm that your payoff calculation is correct. There may have been some recent changes to your account that you haven't considered. The issuer also will be able to answer questions you may have.
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