Credit card debt is something almost every adult knows about. Whether they drown in it, climb out or desperately try to avoid it, credit card debt is something that complicates the lives of many. You make your minimum payments and never see any relief. Every month you ask the same questions, when will I ever finish these payments? Using a credit card payout calculator can help you find the end of that payment tunnel.
There are good debts and bad debts. Bad debt is credit cards and student loans and being in debt because you own a house is a good debt to have!
I hope you don’t have more than $20,000 in debt unless you have a 6 figure income, but the surprise factor is that most of us Americans have at least $6,000 in credit card debt and the majority of us know about interest rates but we try not to care too much about it.
Here’s a scenario: If you owe $20,000 dollars and you continue to make minimum payments, on a national average APR, it takes 20.5 years to pay off your credit card balances. Again, if you keep making your minimum payments every month, you will never be able to save and your payments will only be paid out at the interest rates.
Staying debt free is an art. if you learn the art fast enough you can live a happy financial life and if you don’t you will have to live a lifetime of misery.
Let’s look at a hypothetical situation and make a free estimate:
What Does a Credit Card Payout Calculator Do?
Before you understand how a credit card payout calculator can help you get out of those credit card payments, you need to know what it is and what it does. A credit card payout calculator is exactly what it sounds like. It is a calculator that allows you to calculate your final payout date. In other words, the date when you are finally free of those interest charges and monthly payments.
There are several companies that offer this type of calculator. You can search for it or in many cases just look at the website of the credit cards you already have. The general layout for any of these calculators is a place to enter your current balance, interest rate, minimum monthly payment, and any additional payments you want to add each month. Some allow you to add as many credit cards as you want. After pressing the calculate button, you will get the monthly payment, the interest that will be charged and the payout date.
Most of these calculators also have an avalanche or snowball payout. If you choose avalanche payout, the calculator first calculates the amounts paid and the dates when the highest interest card is paid. Snowball payout, on the other hand, will perform the calculations with the lowest balance as the first priority. More about the benefits of these features will follow later in this article.
How can a credit card payout calculator help me?
Most people use credit cards for emergencies or when there just isn’t enough in the monthly budget to cover all the bills. Adding credit card payments to the mix doesn’t really help in the long run, but in the short run it often seems like the best solution. Then money is tight and as most are still trying to stay within a budget, the credit card payments begin. This timing often means that only the minimum amount is paid. Just what is needed to keep everything in good working order.
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Since the interest rates on most credit cards are on the higher end of the spectrum, this minimum payment normally means you’re only covering the interest each month and a small amount of the principal balance. Hence the feeling that you will pay with those credit cards forever. Enter the credit card payout calculator and the light at the end of the credit card tunnel.
By using the credit card payout calculator, you can find out when you are done making those credit card payments. You can also test different payment amounts to find out how each will affect your payout date. Gives you an idea of how much you can save on interest charges and how much faster you can pay off each credit card. Using the avalanche and snowball calculations will also help you decide which credit card you should pay more on and how to eliminate the smaller amount cards to lower your overall monthly cash pressure.
How do I use the credit card calculator?
Debt amortization calculators are relatively easy to use, and in most cases, each feature has an explain button to explain its purpose. To use a debt payoff calculator, you must start by writing down the balance due on the credit cards you work with. You should also know the monthly payment, the interest rate, and any additional amounts you can reasonably afford to pay each month. When you have all this information together, you are ready to start the process.
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- Step 1 – Select your debt amount below to see if you qualify
- Step 2 –Answer a few quick questions and join hundreds of thousands of Americans on their way to becoming debt free
You enter the amounts in the appropriate boxes on the calculator of your choice. Start by entering just the balance, interest, and your current monthly payment. Beginning with this calculation will help you understand the benefits of adding optional features, such as the debt snowball calculation feature. Once you have written down the original amount and estimated payout date, you can start using the other great features.
The next step is to add any additional amounts you can afford each month. With this calculation, you can see how much you will save with the increase and how much will come earlier than the date of financial freedom. If you’re not sure exactly how much extra you can budget, it may be a good idea to start with the lower amount you have in mind. This lower number will allow you to set realistic goals for yourself and not cause you additional stress if you can’t meet this amount. You can always go back and recalculate if you find you have more money to add than you thought.
Now that you have the numbers for your current payments and additional amounts, you’ll want to use the avalanche and snowball features. Each of these will give you information on which cards you should pay more on and how to keep your money moving further towards your end goal. For example, maybe you have a card with an extremely high interest rate, while everything else is comparable in rate. It is wise to apply a higher amount to this card to lower your final payout.
What do my debt calculator results mean?
What do the results you got mean for your budgetary needs? Depending on your particular calculator, your results may vary slightly. In general, each calculator will give you a breakdown of the balance for each card, the interest you pay, and the payout date for each card. If you chose to use the avalanche or snowball feature, the list will start with the amount to apply to each card in order and again with the payout dates. By following the calculator’s payment guidelines, you can pay off your credit card debt as quickly as possible within your budget.
Now that you know what a credit card payout calculator is and what it does, you can see that using it will help you save money and reduce the amount of time it takes to pay off those credit cards that plague your monthly budget. While the increased amount may seem like it takes more money to get out of debt, you end up saving more with the interest payments you save. Using the credit card payout calculator can help you manage your budget, save some money, and get you out of debt faster.