This free online Credit Card Finance Charge Calculator will calculate the current finance charge for a credit card containing up to 3 different interest rates.
Unlike most credit card interest calculators, this credit card finance charge calculator will also calculate the additional payments and costs that are created by the devious method credit card companies use to apply your payments to your multiple rate balances.
This particular version asks you to enter the minimum payment amount and creates only a 5-year payment allocation comparison. If you would like the minimum payment amount calculated for you, and you would like to see the payment allocation comparison for the entire repayment term, feel free to use this alternate version to calculate credit card interest charges.
If you are like most people, people who have never bothered to flip the credit card statement over and read the fine print that details how truly unscrupulous credit card companies are, you're in for a real shock. A shock that I hope makes you mad enough to vow to never carry a balance on a credit card ever again.
Suppose you have a balance on your credit card that includes multiple rate sub-balances. These might include: low rate sub-balances transferred from another card, normal rate sub-balances consisting of purchases, and high rate cash-advance sub-balances.
Now you would think that credit card companies would, at the very least, apply a relative portion of each of your monthly payments to paying down all of your sub-balances at the same time. NOT!
If you make only the minimum monthly payment, the credit card company is free to apply your entire principal payment (what's left after subtracting finance charges) to the lowest rate sub-balance on your card -- regardless of your creditworthiness.
This means that if your balance includes a 0% sub-balance and a 24.9% sub-balance, the credit card company will apply your entire principal payment to paying down the 0% sub-balance. As you're about to see in the credit card finance charge calculator, this can add up to thousands of dollars of additional finances charges.
If that doesn't make you mad enough to stop sending your potential future wealth to credit card companies, then I'm sorry, but your brain has been washed clean of its ability to tell right from wrong.
On February of 2010 a new law went into effect that requires credit card companies to apply amounts over and above the minimum payment to the highest interest rate sub-balance. You know what that means don't you? Yep, the credit card company lobbyists that are being paid from the finance charges you are sending them were once again successful in getting congress to bow down and kiss their feet.
If congress was truly committed to making credit companies accountable and responsible, the law would have required the credit card companies to apply the entire principal payment amount to the highest rate balances, not just the amount over and above the minimum payment. In other words, the Act was just an "act."
With that, let's use the following credit card finance charge calculator to calculate the current interest charges on your multiple rate card balance, plus compute the additional costs created by the underhanded payment allocation method used by credit card companies.
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Minimum payment amount: The minimum payment amount from your most recent credit card statement. The credit card finance charge calculator will use this figure along with your statement balance to calculate your minimum payment percentage.
Annual fee: If your credit card has one, enter the annual fee. The credit card finance charge calculator will take 1/12th of the fee and add it to your current finance charge.
Penalty APR: The penalty APR as stated on your credit card statement. The credit card finance charge calculator will use this entry to show you what will happen to your monthly finance charge if you are late making a payment.
Number of months introductory rate in effect: If you will be entering a balance transfer amount, select the number of months the introductory rate will be in effect for.
Balance Type column: This column lists the three most common sub-balances that make up your total credit card balance.
Begin Balance entry column: The sub-balance amount for each type as listed on your most recent credit card statement.
New Charges entry column: The total of all additions to your sub-balances that have occurred since your most recent statement.
APR entry column: Enter the current annual interest rate for each sub-balance type you are carrying on your card.
End Balance result column: This column automatically calculates the total of your statement balance and your new charges for each sub-balance type, and then gives the grand total in the last row.
Transfer entry row: This row refers to any balances you have transferred to your card that carries a low introductory rate.
Purchase entry row: This row refers to balances that are charged the normal monthly interest rate.
Cash entry row: This row refers to the portion of your total balance that was for cash advance. Generally cash advance balances are charged a much higher than normal rate.
Total balance on credit card: This is the total of all sub-balances and new charges on your credit card.
Transfer finance charge for current period: This is the current finance charge for the low introductory rate portion of your balance.
Purchases finance charge for current period: This is the current finance charge for the purchases portion of your balance.
Cash advance finance charge for current period: This is the current finance charge for the cash advance portion of your balance.
Annual fee for current period: This is 1/12th of the annual fee you are paying to have the card.
Total finance charges and fees for current period: This is the total current finance charges plus 1/12th of the annual fee.
Finance charge if penalty APR in effect: This is how much your finance charges would be if you had been late making one of your past monthly payments.
Payment Allocation Comparison column: This column lists the two extreme payment allocation methods, followed by a row to show the difference between the two.
Number of Payments result column: This column will show the number of payments for the two extreme payment allocation methods, followed by a row to show the difference between the two.
Finance Charges result column: This column will show the total finance charges for the two extreme payment allocation methods, followed by a row to show the difference between the two.
Lowest rate balance first result row: This row shows the number of payments and interest cost that will result if you make only the minimum monthly payments and if your credit card company applies the principal portion of your payment to reducing the lowest rate balance on your card (unethical payment allocation).
Highest rate balance first result row: This row shows the number of payments and interest cost that will result if you make only the minimum monthly payments and if your credit card company applies the principal portion of your payment to reducing the highest rate balance on your card (ethical payment allocation). Note that if you only entered data for 1 sub-balance type, then this row will be blank.
Cost of unethical payment allocation result row: This row shows the additional payments and interest costs due to the unethical payment allocation by credit card companies. Note that if you only entered data for 1 sub-balance type, then this row will be blank.