 Most credit card companies base the finance charge on the outstanding or average daily balance. That means the finance charge will be different depending on the length of the billing cycle and when during that billing cycle the payment is received. This calculator assumes the payment is made halfway through the monthly billing cycle. Therefore, the finance charge is calculated for half of the month based on the previous outstanding balance, and the remainder of the month on that balance minus the payment. You can choose to make your payment based on the percentage of balance owed or a fixed dollar amount each month. Just be sure to enter at least the minimum amounts required by your credit card in each category.
Note:  Due to different methods of calculating the finance charge, the calculations may differ slightly from those of your credit card company.

 

EXAMPLES:  Let's say you have a credit card that has a balance owed of $4,000.00. The finance charge rate is 15.9%. You can only afford to make the minimum monthly payment (3% of oustanding monthly balance or $50  whichever is higher). You would enter:
 4000 for Balance Owed
 15.9 for Finance Charge Rate
 3 for Percentage Paid (Monthly)
 50 for Minimum Payment
 Select when you'll make the first payment. I'll use January 2002 for this example.
 Press the View Schedule button. You'll see the schedule of payments and finance charges until your card is paid off. Following this example, the card will be paid in 95 months. The total payments will be $6,311.51 with $2,311.51 as interest.
 Now, using the example above, let's say you can make a minimum monthly payment of $250. Change the minimum payment to 250. Keep everything else the same.
 Press View Schedule to see how much less you'll pay in finance charges and how much faster you'll pay it off. In this case the card will be paid in 18 months. The total payments will be $4,491.31 with $491.31 as interest.
 Let's use the same example again, but this time you'd like to pay $500 each month until it's paid in full. You would enter:
 4000 for Balance Owed
 15.9 for Finance Charge Rate
 3 for Percentage Paid (Monthly)  Input that value just to be sure that the $500 payment will be enough to satisfy the 3% minimum.
 500 for Minimum Payment
 Press the View Schedule button. Notice how much time and finance charges you'll save! The card will be paid in full in 9 months. The total payments will be $4,228.13 with $228.13 as interest.
 Once again, let's use the same example. This time you want to pay 15% of the oustanding balance each month. Remember, the credit card company still requires a minimum payment of $50, but you'd rather make the minimum payment be $100. You would enter:
 4000 for Balance Owed
 15.9 for Finance Charge Rate
 15 for Percentage Paid (Monthly)
 100 for Minimum Payment
 Press the View Schedule button. The credit card will be paid in full with the 20th payment. The total payments will be $4,326.53 with $326.53 as interest.

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