Minimum Payment Calculator

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Calculate the True Cost of Paying the Minimum Payment

Sep 06, 2011

 

Every credit card bill comes with a minimum payment, but what is the minimum payment and why would banks set a minimum payment?  To start, the minimum payment is the lowest amount you have to pay each month and the banks usually calculate this as a percentage of what you currently owe.  Most banks typically use anywhere from 2% - 4% to calculate the minimum payments.  If you owed $10,000 for example, you only need to pay $400 if the bank calculates it as 4% of your debt amount.  Because the minimum payment is calculated as a percentage of your outstanding debt, your minimum payment will actually decrease as you pay off your debt.  This may sound like a great deal because you don't have pay as much each month, but sticking to your bank's minimum payment can be a costly mistake. 

To see why paying the minimum amount is so costly, enter your credit card debt and your interest rate into the calculator above.  Tell us the amount you can afford to pay and find out how much faster you will be debt free and how much interest you'd save by making the same payment every month.

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Comments (9)


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Davis L.
Boston, MA  |  September 06, 2011
Where is this Debt Coach tool you spoke of to Sam D?
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Bills.com
September 06, 2011
Use this link to check out the Debt Coach tool.
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Sam D.
April 19, 2011
This minimum payment debt calculator is super helpful, but it would also be terrific if you could show me what the cost of my other options would be too.
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Bills.com
April 19, 2011
Hang in there a few more weeks Sam. Our engineers have been building an incredibly powerful tool that we are calling DebtCoach to help people just like you not only see the cost of minimum payments, but also to compare debt consolidation loans, debt resolution, credit counseling, optimized payments and all debt solutions! Great idea and we are working on it right now.
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Roger G.
Huntington Woods, MI  |  April 14, 2011
This is scary. I have $20,000 in debt and it will take me until 2047 to pay it off at $400 a month. 14% doesn't seem that bad to me, but the amount of money I have to pay back is ridiculous. It's going to cost me $47,100. If I can't afford more than $400 a month, what other option do I have?
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Bills.com
April 14, 2011
See the Bills.com resource What are my debt settlement options? to learn how to resolve debt that is causing you distress.
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Victor H.
April 11, 2011
This is a bit scary, but I suppose that I am pleased to see just how expensive debt can be. Consider me off the minmimum payment cycle from here on out... just not sure what the right answer will be for my debts.
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Harry R.
Chicago, IL  |  April 08, 2011
Oh my god is it expensive to just make minimum payments, which i can barely keep up with anyway. Thanks for opening my eyes to the true cost of this debt.
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Bills.com
April 08, 2011
You are welcome Harry. Sometimes it is just seeing the total cost of debt that opens our eyes to make a better financial pathway in the future.
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