Almost everyone who has a credit card is likely to spend a few minutes each month checking their statement and making sure a payment is made by the due date. If yours is among the 46.1 percent of American households that the Federal Reserve says have credit card debt, then you might save yourself some real money if you spend just a few minutes more managing your plastic. And you don't even have to do much math.
Credit card calculatorsThere is a wide variety of credit card calculators online that can do the hard work for you. Better yet, they're absolutely free. For example, there are four on the IndexCreditCards.com website that can calculate for you the answers to these questions:
- How much interest do I pay when I revolve my credit card balances?
- How much could I save with a lower interest credit card?
- How much do I need to pay each month to pay off my credit card?
- How long will it take to pay off my credit card?
Controlling or eliminating credit card debtEven if you're entirely comfortable with your card debt, you may find that getting a grasp on the basic figures could save you from high interest payments. You might, for example, find the information spurs you to apply for a low-interest product, or for one of the many balance transfer credit cards that are currently offering zero-percent introductory rates for extended periods. But these credit card calculators can be even more valuable if you're starting to worry about the debt levels on your plastic. Many professional counselors say that there are three essential first steps to bringing your finances back under control:
- Recognize that you have a problem.
- Write down the amount you owe on each card so you have a comprehensive overview of your situation.
- Set yourself ambitious but realistic goals for paying down your balances, normally starting with the cards with the highest interest rates. Make minimum payments on the others till the high-cost ones are out the way.
Turning a wish into realityWrite down the major milestones you set yourself so you can track your progress. You might, for instance, say you plan to have a zero balance on card a by the end of 2013, card b by June 2014, and card c two years today. Of course, you can say all that now, before using a calculator, but your chances of reaching your destination would be slight. It's only after you've worked out how much you can realistically afford to pay on each card each month that a vague and largely meaningless aspiration can turn into a solid road map.
Credit cards that make paying down easierIf you have Chase or Discover plastic, be sure to use the powerful online tools that are available free to customers on those credit card companies' websites.
Discover has three services:
- Spend analyser -- a budgeting tool that allows you to identify where your money has been going over a period. You can even view your spending patterns in the form of colorful graphic charts.
- Pay-down planner -- which lets you model your payment options, varying the time and the pain involved.
- Purchase planner -- which could help you to choose how best to pay for your next major purchase.