Credit Card Optimizer Calculator
How to Use the Credit Card Optimizer Calculator
This calculator is meant to show you the best way to make a payment to clear your credit card balance. Many people choose to get a new credit card with a lower interest rate and a high credit limit to help pay off their current balance faster. To use our optimizer calculator, you will need your total credit card balance, as well as the credit card interest rate and credit limit for each credit card.
You will have to input the credit card rate, balance, and credit limit under “existing credit card.” You can input information for up to five credit cards. If you want to transfer your credit card debt to a new credit card, you will also need input information for that card.
Under “new low-interest card,” enter the credit card rate and the credit limit that the credit card offers. You can uncheck the “click here to include a new low-interest card” if you are not transferring your debt to a new card.
Once you input all of the information, click calculate. The calculator will then show you how much you should transfer to each credit card, depending on its credit card rate and credit limit. It will also display what monthly payment you should be making for each card and the monthly payment in total.
The graph at the bottom that says “total interest savings” will show you how much you will end up saving with this distribution of your credit.
Why Should You Pay Off a Credit Card?
Using your credit card can be tempting, but if you aren’t able to make a payment in a timely manner, you may want to stay away from using it. The current balance on your credit cards is not the only amount you need to worry about making a payment towards. Every credit card will charge a specified interest rate, meaning your monthly payment will just become higher and higher as time goes on.
If you don’t pay off your credit card balance, your debt will pile up, which will then negatively impact your credit score. This will cause deep personal finance issues for you. You will not be able to take out any personal loan, car loan, mortgage, etc. from traditional lenders. Alternative lenders will then charge you a higher interest rate as you will be seen as a liability.
It is better to avoid being in credit card debt if you can by paying off your credit card in a timely manner.
Transferring to a New Credit Card at a Lower Rate
When people have outstanding debt on their credit card (or credit cards), they sometimes decide to transfer it to a new credit card with a lower interest rate. This process is called a balance transfer. Having a lower interest credit card will help the consumer pay off the debt quicker.
Keeping track of more than one credit card payment can become a hassle. So, consolidating all of your credit cards into one will make your life simpler as well as you will only be making one monthly payment.
Credit card companies typically make a specific type of credit card for this process called a balance transfer credit card. We’ll explore the balance transfer credit card next.
Exploring Balance Transfer Credit Cards
Banks often offer a balance transfer credit card with a great welcome offer. Typically, the welcome offer is very low, sometimes 0%, for a certain amount of months. For example, the Scotiabank Value Visa Card offers a 0.99% interest rate for the first six months. This is a great deal for consumers who can make a dent in their debt within that time. After the welcome offer is up, you will need to pay an interest rate of 12.99% in this example.
Some welcome offers also include free balance transfers. If not, you will have to make a small payment (typically 1% to 3% for each transfer).
Balance transfer credit cards tend to only be good for consolidating your debt. Any purchases made will be subjected to a higher interest rate, likely to put you off from spending more.
So, when looking for a good balance transfer credit card, look at four things. The credit limit, interest rate, welcome offers, and any fees.
The Bottom Line
Nobody wants to be charged an interest rate charge, especially when making a payment is already a struggle. Unfortunately, interest is very common. It can be overwhelming and can help debt pile up. A loan calculator can also be useful to examine your debt and the associated costs. If you are struggling to make your monthly payment for your credit cards, you may want to consider a balance transfer credit card.
This credit card will help you consolidate all of your debt into one credit card with a lower interest rate. Thus, making your final payment to eliminate your debt should be easier. This also means you will only need to make one monthly payment instead of payment on every card you had.
Our credit card calculator is free and easy to use, so give it a try.