Credit Card Fee Calculator
This age-old saying is very apt when you use your credit card as well. It is a very essential and effective tool, but it needs to be used efficiently. Otherwise a credit card becomes venomous! And this, my dear friend, is called a Credit Card Fee. Although, it may sound super simple, a credit card fee is not a very easy concept.
Only if you understand the length and breadth of the same, you will realize how important it is to avoid paying a credit card fee and not fall into their debt trap!. …read more
Credit Card Fee Calculator Overview
“If you don’t take good care of your credit, then your credit won’t take good care of you.”
― Tyler Gregory
This age-old saying is very apt when you use your credit card as well. It is a very essential and effective tool, but it needs to be used efficiently. Otherwise a credit card becomes venomous! And this, my dear friend, is called a Credit Card Fee. Although, it may sound super simple, a credit card fee is not a very easy concept. Only if you understand the length and breadth of the same, you will realize how important it is to avoid paying a credit card fee and not fall into their debt trap!
What is Credit Card Fee?
When you do not pay complete bill amount on the credit card bill within the credit free period, you will have to pay interest charges on the outstanding amount of credit. The key word in this sentence is “complete bill” wherein it also mentions that if you revolve your payment, i.e. not pay the ENTIRE amount within due date, you would have to pay an interest for the entire tenure.
Interest Free Due Date:
In order to pay the credit card bill amount, you are generally given a credit- free period of 20 days from the date of issue of the credit card bill or the credit card statement.
In case, you pay only the monthly, “Minimum due amount” on your credit card, which is usually only about 5 percent of the total bill amount, then you can repay the remaining outstanding balance over a period of time under the revolving credit facility. But you will have to pay a certain rate of interest om the entire outstanding amount until you pay off the complete bill of your credit card.
Most Credit Cards have a pre- approved facility for their holders. This facility is called revolving credit, which provides you a grace/ free period on your credit purchases through the credit card.
After which, if you do not pay the outstanding amount in full or the Minimum amount due, then the interest which may be 3 to 4% per month will be levied on the entire outstanding amount. Hence, the revolving credit card facility helps you pay your outstanding amount in addition of interest levied on any later date.
How to calculate credit card fee?
The interest free period stands withdrawn on the non-payment of credit card due.
The formula to calculate fee/ interest on credit is explained below.
(Total outstanding amount on credit card x Total number of days counted from the date of the transaction x Monthly Interest rate x 12)/365.
Credit Card Outstanding- INR 80,000
Outstanding Credit Card interest- 3.5%
Now, suppose you made purchases on 5th July, 2018 and repay the amount by 1st Jan, 2019. Then you plan to pay INR 5000 a month to pay off the debt including interest without making any additional purchase until the complete repayment.
Then you can calculate the interest charged by bank as follows:
(80,000 x 179 x 3.5 x 12) /365 × 100 = 16,478
However, this method is comprehensive and requires a lot of calculation and also doesn’t state the number of months of payment and monthly payment plans. In order to get accurate and proper information and calculation you must use online credit card fee calculator.
How Credit Card Interest works?
- If you pay complete amount before the due date, then the system will net off the interest charged for the period from the date of transaction till the payment and you will also not have to pay additional interest charges for it.
- If you make the partial payment of outstanding amount, then the interest will be levied for the whole tenure i.e. from the date of transaction till the partial payment and then again on the outstanding amount after partial payment.
- If you do not pay the “Minimum Due Amount” as on before the due amount due date you will also have to pay a fine for late payment.
- If you make any other purchases without paying the outstanding amount, the amount will keep on adding and will attract interest on new purchases as well.
Credit Card Fee Calculator?
Credit Card fee calculator is an online tool which helps you to calculate your interest amount on credit card due amount. If you are trying to pay your huge credit card balance then the Credit Card Fee Calculator will help you with simple monthly payment plans.
It suggest you with your monthly payment plans if you input how much you would like to pay in a month or in what tenure you would like to pay off the total debt on the card. It is very much like prepaid monthly plans, stating the tenure and the amount you would like to spend providing you various plans to choose according to your needs. It does not include taxes on the interest charges by the credit card companies and many credit card banks/companies start charging interest from the date of your purchase and not from the date of your bill. The interest is calculates on reducing balance method which helps the holder to payoff the debts easily.
Components for calculation of credit card interest/fee
- Outstanding balanced owned on credit card.
- Interest Rate which is mostly between 3 to 4 percent annually.
- Monthly payment you want to make to credit off the debt.
- Tenure of the debt payments in number of months.
How Credit Card Fee Calculator works?
You will have to input your credit card current balance, interest rates and the amount you wish to pay monthly to pay off your debt, the credit card fee calculator will on your behalf determine the tenure or number of months it will take to clear your debt.
Alternatively, You can also input your credit card current balance, interest rates and the tenure within which you want to pay off your debt, the calculator in this case will determine the amount you need to pay every month within the time period/ number of months.
Follow the steps to calculate the interest or fee on the credit card outstanding amount using credit card fee calculator:
- Open the web browser and log in to the website of any bank which offers credit card with interest charges on outstanding amount.
- Enter the details such as balanced owned on credit card, annual interest rate, monthly payment you want to make. You can alternatively instead of entering the monthly payment select the tenure or the number of months within which you want to pay off your debt.
- The calculator will show you the amount you will pay next towards your principal, the amount you will pay next towards the interest on the outstanding amount, total interest card on the amount, number of months it will take to payoff your debt.
Let’s understand it with a simple example
Suppose you have an outstanding balance of Rs 50,000 with an annual interest rate of 3 percent. You want to make monthly payment of Rs 4,000. Then if you put up these details in the credit card fee/interest calculator, it will show you the following:
- Amount of next payment towards principal- Rs 3,875
- Amount of next payment towards interest- Rs 125
- Total finance charge/ Interest charged- Rs 862.41
- Number of monthly payment to pay off the debt- 13 months
- Total number of years to complete the debt- 1.1 years.
Benefits of Credit Card Fee Calculator:
- It enables you to handle your debts easily.
- It is dynamic and provides you with a clear picture.
- You can check your fee through the calculator easily which enables you to decide if you should go for a personal loan or not in case of higher interest charges in credit cards.
- It also enables you to check how much interest is charged in which credit card so that you can also opt to transfer your credit card outstanding amount to cards with lower interest charges.
- Credit card calculations can be tricky for most of the people. But the credit card online calculator makes it simple and easy.