The most strategic way to use credit card calculators is to make them integral to your credit card decision-making process. In other words, before making any significant decisions relating to your credit card use or spending, first crunch the numbers with the appropriate credit card calculator. This will make it easier to pick the right credit card, set goals, evaluate the efficacy of taking on new debt, and manage your finances better.
For example, you could leverage a credit card interest calculator to determine if it's worth paying an annual fee in return for a lower APR. Similarly, a credit card debt calculator, also known as a payoff calculator, will give you a sense of whether a big-ticket purchase is worth it in light of how much time and money will be required for debt repayment.
The results may surprise you, too. Just consider the fact that it would it take around 10 years for someone with a $2,000 balance and a 15% interest rate to become debt free by only making their monthly minimum payment. And over the course of those 10 years, that person will pay roughly $1,200 in interest.
That, in a nutshell, showcases the utility of a credit card calculator. Too often, people find themselves unable to see the forest (i.e. their overall goals of saving money and providing for a stable financial future) for the trees (i.e. what is convenient or seemingly appropriate at the moment). Most people know that they should pay their credit card bills in full every month, for example, but many assume interest won't be that costly, or at least not worth as much as the purchases they'd like to make now. A credit card calculator, however, can easily translate guesswork into hard numbers, thereby pointing you toward the most cost-effective course of action.
“If you want to be credit card debt-free in X years, use a calculator to figure out how much your payment will be,” said David M. Cordell, a clinical professor of management with the University of Texas at Dallas. “If you can do it, do it! If the pill is too big to swallow, try a longer period of time.”
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