If you’re thinking of taking out a credit card, using a credit card calculator is a must.
In fact, even if you’re not thinking of getting a new card right now, a calculator can show you how much you could save if you switched to a new one.
Read our guide to learn more or try out our calculator below.
39.9% APR Representative (variable)
Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender
at ocean, we have our own credit card calculator – why not give it a try below?
A credit card calculator is a really useful tool, whether you want to see how well your current card is working for you, or you’re shopping around for a new one. It can tell you how much you will end up paying overall in order to clear your balance, and also when you’ll be debt-free.
You have two options when you use it; either you can enter your card balance, the APR (the total annual interest plus any fees) and what you currently pay towards it each month. The calculator will then work out how long it will take you to clear the balance if you keep paying the same amount.
Alternatively, you can enter your credit card balance, the APR and the length of time in which you’d like to be able to clear your balance, and the calculator will show you how much you’ll need to pay each month to do so.
Have a go now and enter your own credit card details. You may find that it’s actually going to take you a lot longer than you believed to clear your balance, or that you’re going to end up spending more interest than you originally thought.
this calculator will show how long it will take you to pay off your balance at your currently monthly payment.
Your monthly payment is less than your monthly interest fee
see how much you would need to pay a month to clear your debt more quickly.
There’re a lot of numbers thrown at you when you take out a credit card: interest rate; APR; minimum payment; annual fee, to name but a few. It can all make working out how much you actually pay to use the credit card a little complicated.
However, it’s only by understanding how much it’s costing you to use your credit card that you can consider if you can make it more affordable. And a credit card calculator can show you just how to do this.
For example, you might find that by making just the minimum monthly repayment it will end up costing you almost twice what you actually spent on the card to clear your balance. This is because you’ll be charged interest for the full term that you have money outstanding on your card. By upping your monthly payment by just a pound or two, you could shave hundreds of pounds – and several years – off your debt.
“by sticking with your current card, you could be spending far more than you need to...”
A credit card calculator can also show you whether it might be worth switching to a new card to get a better deal. Credit card providers often run attractive introductory rates on credit cards that switch to their own – higher – interest rates when the deal ends. So, a card that seemed to offer a pretty good deal when you took it out could now be costing you far more than other cards you may be eligible for. By sticking with your current card, you could be spending far more than you need to.
Another thing to consider is that once you have been using your credit card responsibly for a while – by never spending over your limit or missing a payment – your standing as a borrower will improve. If you had a very limited history of borrowing when you took out the card, you won’t have been eligible for the best deals on the market. However, if you regularly spend on the card and don’t miss your payments, your credit history and therefore your standing as a borrower in the eyes of lenders will improve as a result.
If you are in the position we’ve just described and using a credit card calculator reveals that you’re spending far more to use your current card than you thought, now could be the time to apply for a new one with a lower APR. However, if you’ve failed to use your card responsibly, you could find it very difficult to get a new one in the future. Read on to find out why:
“one of the things that shows up is whether you’ve kept up with your minimum monthly repayments...”
Your minimum payment is possibly the most important charge to get to grips with when you take out a credit card. This is what you must pay towards your credit card balance each month. It may be as little as £5, but if you don’t pay it your lender could charge you extra – in most cases £12 – and that’s not even the main danger to be aware of.
Your credit history is a record of all the lines of credit you’ve had available to you over the last six years and how you’ve managed them. One of the things that shows up is whether you’ve kept up with your minimum monthly repayments. If you’ve made one late or missed it altogether, this will show up on your credit history. But why’s this a problem?
Lenders look at your credit history when you apply to them for credit, whether it’s for a personal loan or credit card. If they can see that you’ve had problems managing your borrowing in the past, they could turn your application down as a result. Or they may accept your application, but at a higher rate of interest than you’d applied for.
For this reason, it’s vital you know what your monthly minimum payment is and don’t miss it. You could set up a standing order to cover this charge, so you don’t have to worry about forgetting it. However, if possible, it’s best to clear your balance in full each month so you avoid paying interest altogether.
If you have several credit cards, each with a different balance and interest rate, and a credit card calculator reveals it will be extremely costly and take several years to pay these off, there could be a solution. Providing you have used your current cards responsibly and not missed any minimum payments, you could apply for a balance transfer card with a rate of 0%.
Balance transfer cards let you transfer the outstanding balances on your existing credit and store cards over, so you then make just one repayment a month rather than several. This makes managing your finances a lot simpler – and it could be cheaper too.
Because many of these card providers offer introductory rates of 0% to borrowers with the best credit histories, your payments will go just towards clearing your balance and not be spent on interest. Do your best to clear the balance in full before the 0% period ends, and you could save yourself a bundle on interest. Just be sure not to restart spending on the cards you’ve cleared, or you’ll once again be left juggling several repayments a month.
We hope this guide has cleared up any questions you had about credit card calculators and the advantages of using them. Give ours a go now, and remember you can find lots more useful financial guides on our website.
Alternatively, if you want to work out the estimated monthly payments on a loan or mortgage, check out our loan calculator here or our mortgage calculator here.
39.9% APR Representative (variable)
Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender