Cost of Debt Calculator to Calculate Opportunity Costs

Cost of Debt Calculator Sign

This calculator will calculate the cost of debt in terms of the interest you could be earning on the interest charges you are paying.

Plus, the calculator will also show you what your investment would be worth had you invested the principal instead of borrowed it.

If you're not sure what is meant by "opportunity costs", be sure to visit the Learn tab before using the calculator.

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Cost of Debt Calculator

Calculate cost of debt in terms of the interest you could be earning on the interest charges you are paying.

Special Instructions

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Selected Data Record:

A Data Record is a set of calculator entries that are stored in your web browser's Local Storage. If a Data Record is currently selected in the "Data" tab, this line will list the name you gave to that data record. If no data record is selected, or you have no entries stored for this calculator, the line will display "None".

DataData recordData recordSelected data record: None
Balance:Balance owed:Current balance owed:Current balance owed:

Current balance owed:

Enter the amount you still owe on the debt, but without the dollar sign or any commas. Due to compounding interest, the amount you owe cannot be arrived at by simply multiplying your payment amount by the number of payments remaining. You may need to call your lender to find out the exact amount you owe.

Rate:Interest rate:Annual interest rate:Annual interest rate:

Annual interest rate:

Enter the annual interest rate percentage you are being charged for the debt, but without the percent sign (for .18 or 18%, enter 18).

Minimum pmt:Minimum payment:Current minimum payment amount:Current monthly minimum payment amount:

Current monthly minimum payment amount:

Enter the amount of your current monthly payment. Enter as a dollar amount but without the dollar sign and any commas.

Pmt type:Payment type:Fixed or declining minimum payments:Fixed or declining minimum payments:

Fixed or declining minimum payments:

Choose whether your monthly payment is a Fixed amount, or a Declining minimum payment amount.

ROI:Invest rate:Return on investments:Percent return on investments:

Return on investments:

Enter the rate of return you expect to earn on your investments. Enter as a percentage, but without the percent sign (for .04 or 4%, enter 4).

Months:Payoff months:Months to pay off debt:Months to pay off debt:

Months to pay off debt:

Based on your entries, this is the number of payments you will need to make in order to pay off this debt.

Interest Cost:Interest cost:Total interest cost:Total interest cost:

Total interest cost:

Based on your entries, this is the total interest charges you will pay between now and when you pay off this debt.

Lost interest:Lost earnings:Foregone interest earnings:Foregone interest earnings:

Foregone interest earnings:

If you would have paid cash for what this debt was used to purchase, and invested the avoided interest charges, this is what your investment would be worth for the same time period you would have been making payments on your debt.

Difference:Difference:Difference between borrowing and saving:Difference between borrowing and saving:

Difference between borrowing and saving:

This is the difference between what you will pay in interest charges on this debt, and what you could have earned with the interest savings if you had not created this debt in the first place.

If you would like to save the current entries to the secure online database, tap or click on the Data tab, select "New Data Record", give the data record a name, then tap or click the Save button. To save changes to previously saved entries, simply tap the Save button. Please select and "Clear" any data records you no longer need.

Help and Tools


What opportunity costs are, both tangible and intangible.

What Are Opportunity Costs?

If you're not familiar with the term "opportunity cost," then shame on our public educational system. Why? Because a keen understanding and awareness of that term are critical to the amount of financial happiness you will experience in your lifetime.

If you don't know what they are, opportunity costs are the values of what you give up by choosing one course of action over all other alternative actions and can be tangible, intangible, or both. Let's first discuss the tangible opportunity-cost of debt.

Tangible Opportunity Costs of Buying on Credit

First of all, if you decide to spend a given amount of money on a non-appreciating good or service, you are simultaneously giving up the right to spend that specific allotment of money on anything else that money could have purchased. For example, you could have used that money to:

  • Take time off from work.
  • Purchase something else of equal or lesser value.
  • Purchase an investment.
  • And so on.

In the case of choosing to spend the money rather than invest it, the tangible opportunity cost would be equal to the amount of interest you could have earned on that money if you invested it for a designated period of time (less than or equal to the remainder of your life, or that of your heirs). In the case of large-ticket purchases, the opportunity cost of lost interest earnings can be staggering!

Now, if it turns out you don't have the cash to purchase a product or service you desire, then, of course, you can choose to buy the product or service on credit. If that's the case, then not only are you giving up the right to earn interest on the money used to purchase the product or service, but you are also giving up the right to earn interest on the interest charges you will now be forced to pay rather than invest. Now, did your lending institution ever bring that fact to your attention? Of course not.

Intangible Opportunity Costs of Buying on Credit

In the course of borrowing money for non-essential, non-appreciating products and services, other opportunity costs arise that cannot be quantified -- and therefore cannot be used to calculate the cost of debt. Here are a few of the most common intangible opportunity costs of buying on credit.

Inefficient Decision Making:

Having easy access to credit gives you the false impression that you can have it all. As a result, you're not likely to take the time to determine which basket of products and services will bring you the greatest emotional returns.

If you were forced to pay cash for everything you purchase you would instantly begin getting higher emotional returns from the same amount of money being spent.

Deficient Problem Solving:

Since it's much quicker and easier to solve a problem by throwing borrowed money at it, having easy access to credit tends to thwart our natural problem-solving abilities.

If you were forced to pay cash for everything you purchased you would be amazed at the number of problems you could solve with little or no expenditure of money (decreased opportunity costs).

Crystal Ball Predictions:

When you buy on credit, you are basing your decision on how much money you are earning now, and on how much you enjoy your present work. However, because you cannot know what the future holds, for all you know, you might be repaying the debt on half the income you are making now after being forced to work at a job you hate.

If you knew now that halfway through your debt repayment you would lose your job and would be forced to dig trenches by hand in 110-degree heat -- for half what you are earning now -- would you still decide to create this debt?

Adjust Calculator Width:

Move the slider to left and right to adjust the calculator width. Note that the Help and Tools panel will be hidden when the calculator is too wide to fit both on the screen. Moving the slider to the left will bring the instructions and tools panel back into view.

Also note that some calculators will reformat to accommodate the screen size as you make the calculator wider or narrower. If the calculator is narrow, columns of entry rows will be converted to a vertical entry form, whereas a wider calculator will display columns of entry rows, and the entry fields will be smaller in size ... since they will not need to be "thumb friendly".

Show/Hide Popup Keypads:

Select Show or Hide to show or hide the popup keypad icons located next to numeric entry fields. These are generally only needed for mobile devices that don't have decimal points in their numeric keypads. So if you are on a desktop, you may find the calculator to be more user-friendly and less cluttered without them.

Stick/Unstick Tools:

Select Stick or Unstick to stick or unstick the help and tools panel. Selecting "Stick" will keep the panel in view while scrolling the calculator vertically. If you find that annoying, select "Unstick" to keep the panel in a stationary position.

If the tools panel becomes "Unstuck" on its own, try clicking "Unstick" and then "Stick" to re-stick the panel.