Your Questions About How To Pay Off Credit Card Debt Calculator

Ruth asks…

how to calculate credit card interest / how long it will take to pay it off?

I need an EQUATION or two. I’m trying to program a credit card debt calculator in PHP to basically tell me this as a result…..

if you currently owe $80,000 in credit cards, and your average interest rate is 20%,

You will pay $159,196.96 in interest,
your total payment will be $239,196.96

and it will take you 54.33 years by paying the minimums.

the only part that i know for sure is to add the two numbers together to get the total amount.. beyond that i’m kind of lost, mostly because i don’t understand how credit card interest works on a deep level.

I understand the “simple interest” model, which is NOT what credit cards work on.. most of the stuff i find on the net is for mortgages and simple interest. that doesn’t help me in this case.

thanks in advance!!

the equations themselves will help.

richmama answers:

Let B = credit card balance at the beginning of the month.
Let P = payment made on the credit card for the month.
Let i = monthly interest rate (e.g., if 18% annual, then 1.5% monthly)
Let N = credit card balance at the end of the month.

Assume no purchases or payments are made during the month (except at the end of the month.) Then,

N = B*(1+i) – P

If purchases are made during the month, then redefine B = average credit card balance.

Chris asks…

How much should I pay on my credit cards?

Does anyone know where to find an online calculator that will help determine how much you should pay on your credit cards in order to pay down your debt without throwing away too much money in interest. I’m looking for something that you can input your balance and interest rates that will show you how long it will take to pay off if you put X amount dollars on it monthly.

If you know of any website or program like this, please let me know! Thanks a bunch.

richmama answers:

You should pay off your credit card in full each month so you will pay ZERO interest. If you can’t pay it off in full each month then you shouldn’t be using your credit card and you shouldn’t be buying what you can’t afford.

If you can’t afford to pay it off in full, then pay as much as you can and work on paying off whatever has the highest interest rate first, while paying the minimum on the other accounts.

Robert asks…

File Chapter 7 or be a slave for 6+ years?

I have $35,000 in credit card debt. I am unable to find work in Michigan except selling on eBay, which is how I amassed most of my debt. I did well for a couple of years, but loss of sources, increased competition and slow sales over the past 2 years have left me living with my parents and barely able to make my minimum payments. I am not using my credit cards at all, and literally have no money left after bills, food and rent. (I do pay rent, which helps my Mom – it was actually her idea that I move home.) According to the online credit calculators, at my current payments, it will take me more than 6 years to pay off all my cards, that is if I can find the money. Should I just go ahead and file Chapter 7, since I’m probably stuck at my Mom’s house for the next several years, and will be lucky to find a job at Target? Would a Chapter 7 hurt my chances at finding a crappy minimum wage job? After being self-employed four years, I don’t have the resume to get a good job anyway.

richmama answers:

Yeah eBay’s new fees hurt tons of folks… Chapter 7 may be a GOOD idea at this point in time, but you need to talk to a lawyer about it, and it will cost a few grand to get everything done. But in the end, you wont have the credit card bill anymore. You need a GOOD lawyer because the way Chapter 7 is structured nowadays, some or all of your credit card debt may follow you forever – so a good lawyer will make sure that does not happen to you.

If you have a lot of stock left, and still have your eBay store running, even if limping along, you may want to instead look at selling your entire business – the eBay store, the stock and the business name. A pre-established business and someone with some fresh ideas may make a good match. Maybe someone will be willing to pay you $40k for everything or something like that.

Charles asks…

Math Problem: how do I solve for TIME in a question like this?

James Taylor has $1500 in credit card debt. His annual interest rate is 15%. He decides to make the minimum payment of $25 per month to pay off his credit card bill. How many years will it take for him to pay off his credit card? (Round to the nearest whole number) I need a formula to work this out by hand. NO ONLINE CALCULATORS STEPBY STEP Please

richmama answers:

1- 25$ * 12MONTH = 300$

2- 1500$*15% / 100 = 225

3- 1500$/300$ = 5 YEARS

4- 1500$*15/100 = 225$ and like that with reduce 1500$ , 300$ every year .

5- 1500$ – 1200$ – 900$ – 600$ – 300$ .
(225$) (180$) (135$) (90$) (45$)

6- 225$ +180$ + 135$ + 90$ + 45$ = 675$

7- 1500$+675$ = 2175$

8- 2175$ / 300$ = 7.25 YEARS

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