Ramit Credit Card Payment Calculator

How to use this calculator

To use the Ramit credit card payment calculator:

1. Enter your current credit card balance in the "Current Balance" field.
2. Input your credit card's annual percentage rate (APR) in the "APR" field.
3. Specify the minimum monthly payment percentage or fixed amount in the "Minimum Payment" field.
4. Select the repayment method: minimum payments or fixed payments.
5. Click "Calculate" to see your payment schedule and total interest paid.

The calculator will display a payment schedule and total interest paid based on your inputs. You can adjust the values to see how different repayment strategies affect your debt payoff.

How credit card payments work

Credit card payments are calculated based on several factors, including your current balance, the interest rate, and the repayment method. Here's a breakdown of the key components:

Interest Calculation

Credit card interest is typically calculated on a daily basis using the average daily balance method. The formula for daily interest is:

This daily interest is then added to your balance, and the process repeats each day until the balance is paid off.

Minimum Payments

Most credit cards require minimum monthly payments, which are typically a percentage of your current balance. The minimum payment is calculated as:

If you only make minimum payments, it will take longer to pay off your balance and you'll pay significantly more in interest.

Fixed Payments

Making fixed payments each month can help you pay off your balance faster and reduce the total interest paid. The formula for fixed payments is:

This formula calculates the fixed payment amount that will pay off your balance in the specified number of payments.

Total Interest Paid

The total interest paid is the sum of all interest charges during the repayment period. It can be calculated by tracking the interest accumulated each month or day, depending on the interest calculation method.

Worked example

Let's look at an example to see how the Ramit credit card payment calculator works. Suppose you have a credit card balance of $5,000 with an APR of 18%. You want to compare the results of making minimum payments versus making fixed payments.

Minimum Payments Scenario

If you make minimum payments of 2% of your balance each month, here's what happens:

• Monthly minimum payment: $100
• Total interest paid: $1,200
• Total payments: $6,200
• Time to pay off: 60 months

Fixed Payments Scenario

If you make fixed payments of $100 each month, here's what happens:

• Monthly fixed payment: $100
• Total interest paid: $600
• Total payments: $5,600
• Time to pay off: 56 months

In this example, making fixed payments saves you $600 in interest and pays off your balance 4 months faster. The exact results will vary depending on your specific balance, APR, and repayment strategy.