A credit card calculator is used to determine a few values related to credit card payments. Some of which include calculating how much monthly payments are to be expected from credit card issuers. A credit card calculator also helps determine how long it will take anyone to pay off any credit card balance.
Credit Card Calculator Variables
Most credit card calculator tools available, share almost — if not all variables used for computation. Some of the credit card calculator variables include outstanding credit card balances, APR on the aforementioned credit card balances, transactions fees and other miscellaneous expenses, and OCC recommendation.
Outstanding Credit Card Balance
A credit card calculator needs an outstanding credit card balance as the primary variable in the list. An outstanding credit card balance refers to an existing balance that goes unpaid from unpaid bills.
Those who pay off monthly bills on time do not have any outstanding balance amount to be entered; while those who do, need to have them entered in dollar amounts on credit card calculator tools.
Annual Percentage Rate or APR
Credit card calculator tools online also require the APR rate in the financial institution that provided the credit card. These can be easily located on the credit card bill statement printed and sent every month on an online only paperless bill. If not, it is normally stated in the terms and conditions agreed upon during application process.
A credit card calculator requires the APR entry to be in percentage form.
Transaction Fees and Other Miscellaneous Payments
On a credit card calculator, the transaction fee is not to be mistaken for any interest rates. These are fees collected by the financial institution when an account has an existing balance. To supply transaction fee values for credit card calculator tools, information about it can be also found on the credit card statement.
OCC Recommendation for Minimum Payments
The OCC or Office of the Comptroller for minimum payments is also required by credit card calculator tools. In this recommendation, those with outstanding credit card balance are allowed to pay only a portion of their debt.
The OCC formula used is as follows:
Minimum payment = Transaction Fees + APR percentage x Outstanding credit card balance + Outstanding credit card balance multiplied x 1%. This formula is used in credit card calculator tools.
Financial Institutions Using the OCC Credit Card Calculator Formula
Most financial institutions adopted the OCC credit card calculator formula recommendation since its release on 2003. Some of these banks include the Bank of America, MBNA America Bank, Citibank, and Wells Fargo among many other institutions.
Other popular banks such as JP Morgan Chase and Capital One Financial use a different formula for computing minimum payments allowed. Both use a formula higher than that of the OCC recommendation. JP Morgan Chase allows 2% instead of 1%, while Capital One Financial uses the highest formula at 3% of the outstanding credit card balance.
All credit card calculator tools available over the internet provide information on minimum payments for major financial institutions. Some credit card calculator applications also assist in determining how long it will take for outstanding credit card balances to be paid for.
The Use of Credit Card Calculator in Applications
A credit card calculator is also used during the application process for credit cards. Aside from determining monthly payments to be expected from major financial institutions, these calculators provide other information. This depends on the website or network where the credit card calculator was derived from.
Some of the credit card calculator options available online are the following:
Credit Card Calculator for Comparison Purposes
These types of credit card calculator tools provide the benefit of comparing different credit card providers. Some of the information needed prior to calculation include annual fee and annual interest rates, introductory rate and annual fee if info is available, and compounding period.
This type of credit card calculator displays total costs at the end of the computation. In this way, a credit card applicant can be able compare and see the difference between card providers after total costs are completely calculated.
Although comparison makes it easier to decide which provider to apply a credit card for, 0% credit cards are one of the best options. Other options such as a Home Depot credit card and reloadable credit cards are also beneficial for those with bad credit reports. Both of which are easy to get credit cards.
The credit card calculator for comparison purposes are best for those who are in search for the best business credit cards and the best secured credit cards. A credit card calculator can help in finding out which provider has the best offer.
Credit Card Calculator for Minimum Payment Interest
A credit card calculator such as this is applied for those with outstanding credit card balance but can only pay for minimum amount allowed. It calculates how long will it take for an outstanding balance to be paid off in case only minimum payments are done.
Credit Card Calculator for Fixed Payments
This credit card calculator version is related to the minimum payment interest calculator. The only difference is that this version calculates expected interest rate.
Credit Card Calculator for Principal and Interest
This type of credit card calculator lets a cardholder know how much in credit card payments are actually applied to the principal amount and how much is for interest.