More about credit card debt and payoff


I just found this Credit Card Interest Calculator from American Consumer Credit Counseling (ACCC), a NFCC member agency.  This one can be even more accurate than the BankRate calculator, because it allows input of the LOWEST that the minimum payment will ever be (until the very last payment), based upon the specific credit card agreement.

For example, from a Purdue Federal Credit Union card agreement, “Your minimum payment will be any amount that is past due, any amount exceeding your credit limit, plus the larger of 3% of your new balance or $25 (the “Minimum Payment”).”

So for the PFED agreement, using the ACCC calculator, you would enter a minimum payment of 3% of the balance, and $25 as the lowest possible payment.

For the couple in our in our September 3rd scenario, we can use the same 18% interest rate and find that by simply paying a slightly higher minimum monthly percent AND specifying a higher lowest dollar amount, they would pay about 1/3 the interest and pay it off in nearly 1/3 of the time!

I also found a very good explanation from Discover about how credit card interest is calculated.

Is this all tough to understand?  Of course it is!

If it was less complicated no one would ever fall for it.

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