# Using a Credit Card Payment Calculator (Part Two)

If you are looking at your own finances, you may be interested in understanding more about how credit card payments work and how your creditors figure credit card payments. Minimum credit card payments are a percentage of the total amount owed, plus relevant interest charges. Understanding the math behind your credit cards is a critical part of your financial well being. You can use a credit card payment calculator to figure your minimum credit card payments. You will need your monthly statement and terms in order to use these calculators.

While many of us feel confused by how the credit card companies figure out minimum payments, the math is less complex than you might think. Typically, your credit card provider bases your minimum payment on a percentage of your total balance, usually 2-4% of the total owed. You should be able to find out how much the minimum percentage is by reviewing the information provided in your credit card agreement. You will also need to know your interest rate or APR. Then divide your APR or interest rate by 12 for the number of months in a year and then multiply that by your balance. This figure will tell you how much you are paying in interest each month. Knowing this figure can help you make smart financial decisions.

What does all that mean? Well, if you have a \$1,500 balance and a 3% minimum payment total, your minimum monthly payment is \$45. If your interest rate on that card is 15%, that \$45.00 payment will only pay your principle down by \$18.75 and you will pay \$26.25 in interest charges. While your minimum payments will go down as your balance does, if you are only paying minimums on your credit card, that \$1500 will end up taking you more than ten years to pay off.

There are a number of credit card payment calculators online. You can find them atbankrate.com/brm/calc/MinPayment.asp, csgnetwork.com/creditcardmincalc.html,  andmoney.cnn.com/tools/debtplanner/debtplanner.jsp. While others are available, these are all easy to use, accessible and work well. These simple online tools can provide you with useful information about your credit cards and your debt. You should have all the information you need to plug figures into a credit card calculator on your monthly statement. Some calculators simply provide you with information on the minimum payment, while others will also tell you how long to expect to make payments and how much you will pay in interest charges if you make only the minimum payments.

Taking a look at a minimum payment calculator can change your thoughts about your credit cards. You may not have realized how your creditors figured your minimum payments or how little you were really paying on your balance each month.