There's nothing complex about smart credit card usage, yet credit cards are the downfall of so many people's financial future. The majority of credit cards have absolutely terrible interest rates and fees. Therefore, you should never use your credit card to buy anything you're not going to pay off in the same month unless it's an unavoidable necessity. If you don't have the money, don't spend it!
With that said, you may already have credit card debt you can't payoff right away. Our free calculators and advice below will help you get rid of that debt in the quickest and least costly way possible, and make sure you don't build up bad debt again.
Credit Card Pay Off CalculatorsCredit Card Calculator
Fixed vs. Minimum Payment Calculator
Principle vs Interest Calculator
Credit Card Consolidation CalculatorsCredit Card Consolidation Calculator
Comparison CalculatorsCredit Card Comparison Calculator
Credit Card Calculator Tips
Credit card debt is one of the worst kinds of debt you can have due to extremely high interest rates and fees. The credit card companies make most of their money on people who don't payoff their cards each month, and once you get stuck they make it harder and harder to dig your way out of debt. If you owe money on multiple credit cards and can't afford to pay them off now, check out our Credit Card Consolidation Calculator. You may be able to drastically reduce your monthly payments and interest by consolidating your cards into a single lower interest loan.
If you're unable to consolidate your debt into a single lower interest loan, your best bet is to make payments as high as you can. Let's take a look at the difference between making the minimum payment (2%) vs. a fixed payment on a debt of $10,000 at an 18% APR:
2% Minimum Payments
Number of Payments Until Payoff: 691
Number of Years Until Payoff: 58
Total Interest Paid: $18,931.11
$200 Monthly Payment
Number of Payments Until Payoff: 94
Number of Year Until Payoff: 8
Total Interest Paid: $8,622.36
$300 Monthly Payment
Number of Payments Until Payoff: 47
Number of Year Until Payoff: 4
Total Interest Paid: $3,967.21
As you can see, if you make a 2% minimum payment on $10,000 of debt, you'll be paying down your debt for 58 years! On the other hand, if you're able to pay $300/month, you'll pay your debt off in 4 years. No only that, but by making the minimum payment you end up giving your credit card company $18,931 in interest! But if you make a fixed payment of $300/month you only pay your credit card company $3,967 in interest. Whatever it takes, you should come up with the highest fixed payment possible, and get rid of your debt fast.
Let's jump over to our Compound Interest Calculator and see how much you could end up with in savings if you continued to make that $300/month payment (to yourself as an investment) rather than to your credit card company, after you had paid off your card in 4 years. Not taking taxes and inflation into account, if you made that $300/month payment into savings and were able to average 8% over 54 years, you'd end up with over 3 million dollars! So don't make your credit card company rich. Get out of debt, and save the money yourself.
*Again, the most important thing to remember about your credit card is: If you don't have the money now, don't spend it! Otherwise, you're only hurting yourself in the long run.